Pension report and financial settlement

[SeekingHelp101]

Hi, I have just received the pension expert report which we requested as part of the financial remedy proceedings in divorce. It’s very comprehensive and I think I understand what it is recommending but don’t understand all the terms and whether offsetting/pso is best for me, and the amounts I should be trying to negotiate. Also have the opportunity to ask questions. Is a lawyer or a financial planner the best person to seek advice on these issues? Thanks !

Ideally you will need advice from both for different reasons. The pension report gives you the information you need to plan your life (financial adviser) and to negotiate your divorce (lawyer).

Sometimes it can be pretty clear what you should plan for and sometimes it isn’t. A lot depends on what the overall financial situation looks like. And at the end of the day you have to make decisions for yourself.

The issue with pensions is that their cash value today is potentially less then it is in the future as pension share. If you decide you want or need it today to buy a house you are giving away a big future asset. But it may be there isn’t much choice over that.

If you posted more about your circumstances people might have some good advice. That being said a lot of MN posts give away pension share too easily for emotive reasons to stay in the family home.

@LemonTT Thank you. Seems like I need advice on both legal and financial side.

8 year marriage, 1 child, ex dh previously very high earner and pension pot of c £800k, mine is £150k. Report seems to recommend partial offset and partial pso. Amount accrued during marriage that should be paid to me ois stated as between 4-6%.

Obviously offsetting is a not an exact science so curious to see what methods employed in other divorces in similar circs

What’s the value recommended for sharing? 4-6% 800k ? So c32-48k?

@millymollymoomoo the way I read it it suggests 4-6% of the amount accrued during the marriage only, ie for8 years only. So less than £20k and also states that cash value will be less.

states c £250k for sharing in total if total period for pension accrual taken into account

Without meaning to sound disrespectful that’s not a lot of money to end up spending lots on advisors and lawyers for guidance.

you need to think

1. do you need cash now to help with buying a house and can cover pension payments into your own pot for retirement

2. will the money now make little difference to housing ability now etc therefore put transfer the mission into your own pot

that’s it really

in the baste that the valuation and your interpretation of it is correct

@millymollymoomoo that is my thinking - if I’m not entitled to much is it worth fighting over? The other issue is that I’m not sure if I’ve interpreted the report correctly so will not to spend some more just to get someone to explain it to me!

Speak to a lawyer. Little point in getting the report if you are not going to do something about it.

Don't fall into the trap of thinking it's not worth fighting for, that's what they want you to think. It gets said a lot on here but too many (mostly women, let's be realistic) get screwed over on pension division.

Your solicitor can interpret it for you

It would be unwise to take any advice that says it’s not a lot of money to fight for.

£250k can become a lot of money dependent on how it is invested.

Investing in good financial advice and guidance can really pay off.

Where does 250k come from ?

@millymollymoomoo its the amount that the actuaries say I should receive from ex’s pension funds if the whole pension accrual period is taken into amount, rather than accrual of funds during the marriage period.

Well obvs we don’t know circumstances but why do you feel you should receive pension accrued pre marriage which you’ve not helped accrue?

anyway, your lawyer should be able to interpret and guide you on outcomes

@millymollymoomoo ours is a needs case but you are quite right that this is one argument which no doubt he will be advancing

@SeekingHelp101 in your needs case the court will look at the Section 25 factors and splitting assets accordingly. This will include all of the assets. Needs cases may depart from the 50/50 principle which means one party may be allocated more than 50% and the other less.

Well done for investing in an actuary report!

Re the question of contributions…they are not deemed relevant in some cases.

In some cases e.g. in long marriages or needs cases with those coming up in England and Wales contributions may not factored in. So for example a husband with pension accrued before a long marriage or needs case may not keep the pension on the basis the wife did not contribute to it.

To get a fair and good settlement, make sure you have all the assets valued, and then analyse the results. Get advice and guidance where needed. Once you know the finances inside out, work out the best outcome for you based on the context of your case and the Section 25 factors.

By including the pensions and getting a PODE report you’ve given yourself - and the judge - vital and detailed information about capital and future income which is needed to consider your settlement.

@Penready thank you! As it is a needs case and in spite of the fact that it is not a long marriage (7 years before separation, we have a 5 year old dc, whom livrs with me) plus the value of his pension, I was advised to get a pension expert report. Ex agreed to it reluctantly despite him telling me consistently that ‘ you are not entitled to any of it as we had a short marriage’

forms e were filed a while ago so just waiting for updated disclosure before reviewing everything again - FDR has been adjourned once already!

Unless you’re in Scotland the pensions can be pooled and shared 50/50 regardless of what was built up during the marriage. It’s only in Scotland that only the amount accrued during the marriage is a marital asset. In England the entire pot becomes a joint asset.

If you lived together prior and running into the marriage those years can also included.

For the FDR to be effective all the assets have to be on the table and each one valued. If information is missing, get a solicitor’s letter or court order to get it if it’s not forthcoming.

Have you sent form P to the pension providers? - putting them on notice that there may be a future pension sharing order. A court cannot make a pension sharing order if this has not been done. Form Ps can be sent to pension providers now/early in the process. It just puts them on notice.

A directions hearing may happen later/after FDR if needed. This is where a judge reads the case, hears it and then gives the parties directions on what they would pronounce in final judgement if the case came before them. This gives parties a real indication of what an outcome would be if it went to final hearing.

You sound like you’ve been intent on getting full and frank disclosure with documentation to evidence value, and getting valuations from experts. This is such good effort and in the right places!

Contjnue to look after yourself and your future. Your 76 year old self will thank you in the future!

Yes i was told this by a solicitor this week. It doesn't matter if the pension was accrued before or after marriage, it's all taken into account now

The report will answer the questions put in the instructions to the actuary on what to report on. I think it’s standard to ask for a variety of circumstances - such as what the sharing should be for equality of pension income in retirement? What would the value of the pension be in offsetting against eg a property ( the cash value ) and any further questions you wanted to ask of the actuary . The report comes up with different valuations depending on the questions you put to the actuary . The fact that a calculation re ring fencing pre marital pension accrual is provided in the report doesn’t mean that the premarital pension can be ring fenced in law - that’s up to a judge to decide ( and if there’s not enough assets in the marriage to satisfy needs they are more likely to include pre marital pension) .

@Happy1966 thanks. Yes that is how the report is formated. I think I’m just worried as ex kept saying I was due nothing from the pension as we weren’t married for long, and I know he will cling to the % stated as accrued in the marriage. He was a bit of a bully and controlling in the mariage and and as I’m keen to get the finances sorted out sooner than later, it is just stressing me out thinking about the fight there is to be had yet.

I completely understand. It is so stressful. Your STBX is using bullying and scare tactics. My understanding is in needs cases ( especially when you have a child ) accrued pension pre marriage will usually be ignored ( unless there’s enough money in the pot to satisfy needs of each party ) . Try to take each day at a time. I know it’s really hard.At the moment you’ve got all these different options in the report and one of these is very scary financially. until negotiations start, you’re in limbo but as there’s nothing you can do about that and the outcome can’t be reliably predicted, if you can, try and put it to one side and spend some nice times with your child and when you can do do something nice for yourself. For reassurance I would say it’s more likely than not that all of your STBX s pension will be included as an asset and split at least 50/50. Take care xxx

Ps when I say ignored I mean it can’t be ring faced and excluded ! It will have to be included as an asset Sorry xx

It’s often the way in divorce that men want to hang onto their pensions and women want to hang onto the house.

Just because the report has been prepared that way doesn’t mean that’s all you’re entitled to. Cohabitation can be taken into account and added to the length of the marriage. In a long marriage (10 years +) the starting point for division of assets is 50/50 as I understand it, and assets accrued pre-marriage can’t always be ringfenced if there’s a big imbalance.

You probably need professional advice on this one.