pension valuation question

[peanu]

I read an actuary charges £1500 to value each pension fund.

In this scenario, divorcing couple A & B:

A - has 1 SIPP, maybe worth £230k on paper
B - has 3 pension funds. (1) employer pension, part final salary part defined contribution, (2) tiny other employer fund, just 10 months of contributions (3) a private pension (maybe £70k on paper).

A & B and B have similar life time earnings & have put similar total contributions into their pension funds.

I am trying to figure out if £6k minimum to pay actuary to come up with some kind of comparative totals for their respective pension funds -- could possibly be worthwhile. If it is worthwhile, who will likely benefit most - A or B.

Thanks if anyone understands.

You will be entitled to one valuation of the employer funds every year for free. I’m not sure about the SIPP but it shouldn’t be anything like that.

Speak to pensions advisory service they can help you with this, they are free and independent

Surely only B (1) is worth a valuation, as DC pensions are worth their current valuation.

I guess I have a lot to learn.

Reading this makes me think the actuary would only put a value on the single pension that is part-final salary & part defined contributions? Is that right -- paying an actuary would only be relevant to the pension with a final salary component?

In contrast, This thread suggests that actuaries value the entire pension position of both parties, but elsewhere I read that actuary fee is £1500/pension scheme (not including state pensions?); that's £6k (not including state pensions). I just can't imagine it will be value for money for A or B.

fwiw, I think not to involve an actuary. But partner might want to argue for one. I was just trying to figure out how strongly I should feel about this.

Friend is going thru expensive divorce. The don't have much and the lawyers & mediator will end up with most of what they do have.

I believe you would only need an actuary to value the final salary scheme. The others are defined benefit and have a value of whatever their current value is (I personally get statements quarterly for mine). It may cost a little to get a statement as at a certain date, but wouldn't be much as there would be no actuarial calculations to do.

You really only need an actuary if you've got a reason for it. Are you different ages? Is one of you disabled? I'd the final salary pension likely to be worth a lot?

I was quoted £3k for an actuary to give advice on a situation with 6 pension funds in my divorce.

I came to your way of thinking in the end - the money on the actuary wasn't worth spending.
I knew full well my ex's finally salary/dc pension would be worth more in the long run. Our CETVs were nearly same but his income would be x3 higher.
Plus I thought on the lines of if you throw those 6k costs into your pension now what would that be worth in retirement.
And you get the report but you still have to wrangle negotiations and pay for solicitors etc so it doesn't mean that's what you get.
He was being more than reasonable on the house etc and for me it became easier to leave the pension stuff. Overall I'm happy with our split
Don't forget it costs £000s to move them around as well - or if you offset then I read that the judges don't take £1 pension as equalling £1 other assets.

It will be the one fee to value all pensions. They give you a %pension share for equity of value or equality of income.
Check out EPS.

I can't see that it will cost £6k for an actuary. We've got more pensions than that and are paying c. £2k plus VAT for the joint report.

That's helpful NoIdea, I read £1500k per individual scheme. Did seem quite steep!

Yes, we had 7 pensions between us and it was £1500 + VAT (5 years ago). Was very worthwhile for me though, ex had 3 final salary pensions which were very valuable!

@oldfatandtired1

Yes, we had 7 pensions between us and it was £1500 + VAT (5 years ago). Was very worthwhile for me though, ex had 3 final salary pensions which were very valuable!

Very similar to my situation, and very worthwhile for me too!

The actuary i used charged £2000 and billed us directly for half the amount each.
I felt it was well worth it, as he 'equalised' our pensions. This enabled us to see what the pot of pensions would be worth to both parties. It was money well spent and our judge at the FDR took it as a done deal, to how we would split it. An expert is the only one who can give you an indication on what the pensions are worth.

@waterSpider

I'm not sure DCs are necessarily worth their current valuation. You cannot compare £100k in a pension fund to £100k in home equity for example because if you buy an income from it, it might be subject to income tax. Also, that £100k in home equity can be borrowed against or the asset can be sold to access the money today whereas pension withdrawal comes with heavy penalties, so you have to work out the time value of the money.

Let's look at the practical problems if one gets the home equity and the other the pension. The one with the home equity can enjoy rises in the property market tax free as it is their principal residence. The one with a pension has nothing to live on until they reach age 55, they cannot invest it in a residential property and will miss out on gains in the housing market and when they do receive an income they might be subject to 20% income tax on some or all of it. They might also die a year after buying an annuity and only ever get about £4k in income from it.

Depending on the ages of the couple I would say a pension is worth about half what home equity is worth. So £50k home equity is worth the same as a £100k pension.