Hmmm...?

[teisted]

Just had another mediation session.

Over 15 years married
2 DC's 17 & 13 (CMS agreed)
He earns £70K
I earn £17k
His pension £50k
My pension - £5
House equity £100k

Initially STBXH was offering his £50k of equity as a "clean break". I would make no claim on pension.

Today he wants £12k of equity and "clean break". No claim on pension. Mediator seemed to think this is fair....

I always worked (albeit part time) I am now full time term time. Big earning disparity/earning potential.

I see it as: pot = £150k

He wants £62k (£50k from pension, £12k from equity) leaving me with £88k (remainder of equity) and will take on mortgage (which I've established is possible)

Does this seem fair? Just after opinions before I take the proposal to my solicitor

Pensions are not like other assets. The face value can be misleading because normally you have to pay tax on them when you start earning an income from them and also they are not accessible until age 55. I've been told to value them at 65% of face value.

Based on that your asset split is about 65:35 in your favour which seems fair on the income disparity. I've been told I wouldn't pay SM on my income because I can't bridge the gap (SM reduces UC £ for £) and it is similar to your STBXs. Seems fair he gets enough to buy a place too as you should divorce in an equal footing. In current market he could be severely prejudiced having to save a new deposit to buy.

Obviously it could go more in your favour. Or less. Quite expensive to find out which though.

Seems pretty fair to me to be honest

you could always get a better paid job and increase your earnings rather than go after your ex husbands pension that he's worked hard for 🤷‍♀️

It's an 88:12 split on equity and 10:90 on the pensions.

Presumably you both have some years away till retirement so can build up some entitlement in your own name. Frankly having jam today that can house you may work better than jam tomorrow. It's a big jump from his original offer but also bear in mind how much each session and future solicitor or court could cost on what are marginal amounts. How much further would you push to be happy. If you ask for more pension will he reduce your equity. If you can keep your mortgage lower with more equity then you can put more into the pension. Given the income disparity it's probably seen as a reasonable trade off

That he's offered it you suggests he might budge a tiny bit more but is it going to be worth more than the next mediation cost?

No I wouldn't accept such a massive drop in our initial agreed talks.

I would want half the pension for that drop. 🌸

@bg21

you could always get a better paid job and increase your earnings rather than go after your ex husbands pension that he's worked hard for 🤷‍♀️

these posts are so insulting

@FutureExH

Pensions are not like other assets. The face value can be misleading because normally you have to pay tax on them when you start earning an income from them and also they are not accessible until age 55. I've been told to value them at 65% of face value.

Based on that your asset split is about 65:35 in your favour which seems fair on the income disparity. I've been told I wouldn't pay SM on my income because I can't bridge the gap (SM reduces UC £ for £) and it is similar to your STBXs. Seems fair he gets enough to buy a place too as you should divorce in an equal footing. In current market he could be severely prejudiced having to save a new deposit to buy.

Obviously it could go more in your favour. Or less. Quite expensive to find out which though.

You can't make blanket assumptions about pensions being valued at x%, a £5k pension at say 40 years old might not be worth a massive amount after 20 years. There's a tax free personal allowance everyone has each year so even including a state pension some(many) people won't pay any tax on their pensions. Likewise you can't value it at 65%. If someone can access that pension already or next year it's almost a liquid asset so won't be valued at 65%, if the person is 30, again it might be valued even less as it's so far away from being accessible to predict a value. That's why equity and pensions can be traded but are still distinct pots that each split needs to weigh up a value in the overall financial split.

I would say that it sounds fair. Does he give a reason for the change - can you communicate with him? He still leaves you with a very good % and if your CMS is agreed he is looking after the children as well it seems? Do you feel it gives you both the opportunity to put behind you your difficulties and move on? Will you in a few years feel bitter about it and resent anything? Ask yourself those questions - it's important, as in order to move on you have to reach a good place in your own mind and heart (not listening to family and friends and us lot!!) about what is fair and what is reasonable to give you both the ability to feel as ok as possible about the agreement.

Thoughts with you - these things are hugely difficult... I'm 2 years out the others side and thankfully we did it right too - never easy and some huge difficulties, but we found a way and it's meant we can both move on.

@QueenBee52

It's a big drop proportionately but there are not huge assets at play. £12k could easily be lost in legal fees and the end result could well be to the detriment of the OP.

@wobytide

It's precisely because you can't made assumptions about pensions that they are valued lower. If you tried to access the cash today you would pay 55% tax. In the future, you have no guarantee that the pension value keeps up with inflation. When it generates an income you might pay 20% or even 40% tax on it. Taxes could even rise by then, you don't know. It's risky and therefore this is factored into its current value.

I stand by my original assessment. You could do better or worse, but it is not worth the legal fees to find out.

[quote FutureExH]@QueenBee52

It's a big drop proportionately but there are not huge assets at play. £12k could easily be lost in legal fees and the end result could well be to the detriment of the OP.

@wobytide

It's precisely because you can't made assumptions about pensions that they are valued lower. If you tried to access the cash today you would pay 55% tax. In the future, you have no guarantee that the pension value keeps up with inflation. When it generates an income you might pay 20% or even 40% tax on it. Taxes could even rise by then, you don't know. It's risky and therefore this is factored into its current value.

I stand by my original assessment. You could do better or worse, but it is not worth the legal fees to find out.[/quote]
I think you're assuming everyone is the same position as you. The majority of people don't have to worry about 55% taxation on a pension now or in the future. Presume you still haven't sought legal advice about your circumstances

On the information you've given it is well within the range of reasonable orders a judge might make in your circumstances. Probably towards the upper end of that range. In particular it is likely to be fair for your STBXH to have some liquid capital now to rehouse.

You'll also want to factor in the legal fees you'll save by settling now.

Do you have any savings or other assets- cars?

@bg21

you could always get a better paid job and increase your earnings rather than go after your ex husbands pension that he's worked hard for 🤷‍♀️

I never understand why the wife gets a share of the pension. I will get just a state pension and DP has a pension pot of about 150k so far. If we split up, no way would I go after that

Because the family funds were put into the pension. They weren't used to open up a separate pension for the wife. The agreement was to keep one and fund both of them in retirement.
The financial split needs to reflect that.

50k pension seems very low. Have you seen the actual cetv?
Does it leave you on an equal footing in terms of the kind of house you'll both be in?
What about requesting spousal support for 2 years while you ramp up hours etc?

@wobytide

It's not just my circumstances. If OP's STBX earns £70k and only has a pension of £50k then it is reasonable to assume only income he would pay 40% tax on has gone into that pot. HMRC would charge 55% for early withdrawal and on top of that he would need to engage a pension specialist to do it who could charge as much as another 30%. Early pension withdrawal is simply not a good idea and therefore pensions have a time value to consider hence 65% of face value.

@PicaK

If OP sought spousal then her STBX would have to be able to "bridge the gap" of universal credit (you lose UC £ for £ when SM is paid). I estimate that OP is entitled to around £400 a month in UC so he would have to pay that before OP saw any gain. As STBX would already pay around £700 a month in CM and OP's income would already be around £2.8k a month in UC, salary, CB and CM I find SM very unlikely. Once he had paid the £400 to bridge the UC gap she would still be on £2.8k and he would be down to £2.9k. Bear in mind the STBX has also lost most of the home equity and would have to start again so I just don't see SM in that situation.

@Keeping2ChevronsApart It sounds as though you're not married, so you couldn't "go after" anything at all anyway.

A marriage is a legal partnership. If it's agreed that one person works and pays into a pension and the other stays at home to bring up children, then things are evened out in the case of a divorce.

@bg21 wow! So rude. What if my job/quals/experience have all been in the same field during and after marriage? How am I now, mid 40's, to maintain a roof over my DC's head, put food on the table and retrain for a higher paid career??

We agreed I worked P/T and was a SAHM. As soon as we separated, I increased to FT. I maximised my warning capacity at that point.

No one plans for divorce. My STBH's career has flourished as I've raised our children. Quite rightly so, this should be compensated for. He "worked hard" contributing to his pension from OUR household income, while I "worked hard" raining OUR children!

@Keeping2ChevronsApart it’s your perogative to not do that. But lm guessing she went part time when the children were small, to care for them and pay less childcare. Why should people be penalised with their salary and pension? Her husband benefitted from her doing this

@HollowTalk well, exactly!!

@EL8888 thank you! This is exactly right.

Some people on here can be so bloody rude!

You need legal advice. And you need to make sure he’s done a full and frank financial disclosure. How old are you? That is some income disparity. I would be pushing for some spousal maintenance at least for a few years to give you a chance to establish yourself career wise (if you have time to do this) to make up the shortfall. You will not be expected to have a significant drop in standard of living whilst your partner’s remains as it was. How much will the mortgage be? Where will the children live the majority of the time? Please see a good family lawyer and get some advice. (I have recently been through a financial settlement as part of a divorce)

@EL8888

I wouldn't say she is being penalised though? Assuming she has majority of custody (which I would have thought most parents would want and one of the main ways the financially stronger ones lose out on the most) and gets CM of around £700 a month her income is almost the same as the STBX and she's going to get 88% of the current assets which is a big deal. On property alone, if you can't get back into the property ladder after a split then you're losing out on around £10k of capital gains a year so her STBX has that to deal with too. Pension isn't anywhere near as capital generating an asset and comparing the two is like comparing apples and oranges.

On incomes, she'll only be around £2k a month down on what the whole family were making together and once you remove the STBX's needs like food, water, commuting, clothes, etc then this drop will be easily manageable without SM, especially as she has the advantage of a lower mortgage to pay than her STBX.

I'm not saying she should not get this asset split in her favour though, only that I think what is on the table is fair.

I agree you will need to get a better paid job. I imagine there will be a gap of a good number of years before you can claim any payment from his pension. You certainly need advice. You can't treat a pension pot in the same way as savings because it's to provide an income. And I imagine how old you both are needs to be taken into account.

@teisted rudeness and being a martyr have a lot to answer for!