What happens to a final salary pension on divorce? Any actuary here?

[numbbrain]

Me and Ex are divorcing and have had mediation sessions to discuss finances.

There is one question that the mediator cannot answer:

With the Final salary pension we have a cetv. But if say half that sum is taken and given to me. When he retires in say 10 years time, how is his pension calculated. Will he still get 1/60 times total years at work.

Thanks

During my divorce the discussion was around half of my pension up to that point only as our divorce was a clean break and he would have no claim on any of my future income.

As said previously I am an actuary for a final salary scheme and have been for nearly 20 years. I have never ever settled a divorce case on anything except a standard cetv. The value is as at the time of the divorce, if you're having a clean break then future earning potential is not allowed for.
Obviously I am not a family /divorce lawyer, I don't get to see how the decisions are made but I like I said I've never seen anything other than a standard cetv paid out.

Pinkhorse, with all due respect, you are confusing the issue of calculating a CETV with getting expert actuarial advice on how to share pensions to achieve a fair result.

If Mick has a final salary scheme valued at £500,000, and his wife Jane gets a pension transfer of 50%, to put into a money purchase scheme with Standard Life, the income Jane will get from that fund may very well be a fraction of what Mick will get from the remaining 50% of his final salary scheme. That's what an actuarial report addresses.

In addition, an actuary can factor in the Mick's state pension may be higher than Jane's will be, and will therefore adjust accordingly so global income is equal. And will advise on which pensions should be shared to maximise income for both parties.

In your job implementing pension share orders, you will always be told to share a percentage of your company's valuation, because that's your company's valuation. The court can hardly tell you to do a percentage of a different valuation!

I'm a family solicitor and I have been chopping up pensions since earmarking came in in 1996. You really don't know what you're talking about here. And I really do. I'm pretty good on pensions, and what questions need to be asked and when.

Yes, it was exactly as MrsBert says in her second paragraph - that's what the actuary did, and that's not what halving the CETV would have done.

@pinkhorse as an actuary working for a final salary scheme you will also be well versed in valuing the pensions in a “worst case scenario” as your respective scheme is probably underfunded?! My XH pension was valued at 770k in best case scenario and around 240k in worst case scenario.

The whole idea of using an actuary in final salary divorces is to achieve clarity and sadly the truth is that most schemes don’t provide that willingly.

Also, there is a reason why here are countless solicitors and actuaries specialising in final salary pension matters. If it was just a matter of a quick call of the cetv at the point of enquiry then there’s be no difference between a fs scheme and a regular pension. Maybe you need to do a course.

Finally, I just got divorced based on a projection of income from both my regular company pensions and his fs pension scheme and the calcs of his pension as a cetv vs. true value based on income were MILES apart. So the division of our mutual pension assets were not done on value but rather on projected income and a proportion of his was allocated to me as a result.

That's why I said I'm not a family lawyer or solicitor if you read my post properly!

I thin' my mum walked away with 2 x 100 % pension lots and 51% of his biggest pot as opposed to 50/50. You really need an actuary to work it out. Of course your ex doesn't want this ....

Thankyou

It is a lot clearer now and I will seek out a solicitor that understands this!

MrsBertBibby - Will the actuary also look at house equity in relation to pensions? I am having 80% equity from the house and EH says that this is worth more than a pension, so he wants to reduce the pension value by 30% before calculating the split.

Is this the norm?

@numbbrain - no, the job of the actuary is to look at the pension.

You say "I'm having 80% of the equity..." so assuming you've agreed that? We dealt with the house and the pensions as separate issues.

1. achieve equality in income of pensions as they stood at the current day value. I got 33% of his pension and I am now a stand alone member of his scheme although I cant add money to it etc. Ultimately, as he goes up in rank over the coming decade, his final salary pension will be worth more even with the chunk i;ve had as it is calculated on his final salary (hence the name) and I assume he'll be much much much senior to now. Whatever, I have been allocated a portion which by the time I retire should help things a little.
2. the house equity was dealt with as a separate issue and involved consideration for accommodating the kids.

Good luck

@Goldilocks would you mind if I DM you?

Just had my FDR today and the judge directed that an actuarial report be done for my STBXH police pension. The first thing my barrister said (before even taking her coat off) was that she couldn't believe I hadn't been advised to get a report from an actuary.

This is after I had queried with my solicitor whether or not it was worthwhile (after reading numerous MN threads recommending it) and being advised against it as it may be viewed as "adversarial" by the court!

Happy for anyone to DM me. I have some helpful guides in pdf - I wonder if I can upload them here as attachments?

Thanks Goldilocks have sent you a message