Another question, this time about pensions, oh wise ones

[nostaples]

My teachers' pension CETV has finally come through. Have actually ordered an actuarial report too but that's yet to arrive. Problem is I don't understand at all. The total CETV payable estimated, what does that actually mean? And is that the figure if I retired tomorrow which I can't do or working on the assumption I will work, on the same salary, for another 20 years? Likewise the pension and lump sum figure? I am sorry to be so clueless.

CETV is the current value of your pension, based on having worked up till now (but not assuming any further contributions). So, the amount you would need to pay to get your pension if you stopped contributing now and retired at the normal age.

The annual pension and lump sum, for scheme statements, are usually calculated on the same basis.

CETV is often about 20x the likely annual pension, as a VERY rough guide.

Thanks @waterSpider you've explained that very clearly. If STBXH's CETV is a third bigger than mine, say an extra £100k, then presumably the divorce settlement would aim to equalise that? But if I wanted to offset that against the house would that mean I could ask for an additional 50k equity in the house? Not sure how it works.

You can choose to agree any number of things. And court/negotiations would also look at people's ages, ability to continue working, other assets.

Most people regard a £1 in the hand as more valuable than a £1 in a CETV -- certainly so if you want to buy a house or something and if pension age is some time off.

In principle, though, you could argue for more of the liquid assets to "offset" the higher pension. Or, gain a share in his pension. But solicitors would ask for a lot more details to get going on a case.

My ex had a much larger pension than me. We agreed I would take cash value from the marital house to enable me to buy a house big enough for 2 teenage children and I was lucky enough of get same value in £s.

So it’s worth trying. My view was I needed to house children now and in the future I can always downsize when kids have left if I need to support pension.

Yes it would look at you both getting your fair share. So if for example yours was £75k and his was £225k, he would be entitled to half of yours and you would be entitled to half of his. So you'd be entitled to £112.5k of his and he'd be entitled to £37.5k of yours. Take £37.5k away from £112.5k and you've got £75k. That is what you'd be entitled to of his pension and yours wouldn't be touched. That's if you're going the 50/50 on everything route. So you could reasonably ask that you don't touch his pension but get £75k more equity from the house/savings etc. I hope that makes sense

You can always ask.

Pension is often considered to be less valuable than cash in hand partly due to the immediate utility / access to cash. It is also because £1 pension into a pension pot will have tax relief, at your marginal rate, which will increase the value of the pension fund by that amount).

E.g if you took £10k cash and popped it into a pemsion, as a basic tax payer, that would immediately be worth £12.5k in pension. For a higher rate tax payer, it's even less attractive to swap pension for cash, pound for pound.

So you can ask, but if it came to actuary's reports on pensions, you may well find the report will give a lower 'cash value' if you want to offset a pension (ie take other asset instead of a pension amount).

How it'll affect your overall financial agreement depends on your specific circumstances, and needs.