Pension offsetting

[myown2feetaregreat]

Now that the rules have changed re pensions, can anyone advise if the CETV matches the value of the home I.E. £220k house value £ 250k pension his, hers is £14k , can this be offset to keep the marital home. My friend is desperate to remain in her home ( elderly parents, very close by) she is currently looking for a solicitor . Her h appears to have visited all the local free for half hour companies. He has also taken all her documents with him on his way out of the door . She has a rough idea of what his pension and salary are worth without them ,he has left no forwarding address so all paperwork sent to his work address. Thank you

There is no substitute for independent legal advice. The courts require disclosure. If your friend and her husband can reach agreement the disclosure is simplified. The Cash Equivalent Value can undervalue a pension fund and it may be necessary to obtain an actuarial valuation to ascertain the true value.

Depending on the needs and aspirations of both parties it is possible to offset pension against other assets. However pensions are treated differently from other assets. Because they can't always be realised there may be some discounting in the value of the pension. Exactly how much depends on factors such as the spouses' respective ages and the number of years before retirement.

Divorce settlements depend on the specific details and the value of assets aren't necessarily shared 50:50. The priority is the welfare of dependent children, but in many cases when there isn't significant wealth the needs of the parties is near the top of the list of factors taken into account. Both parents will "need" somewhere suitable for the children to stay and the former matrimonial home may have to be sold to release equity so everyone can be housed.

A good starting point is for divorcing couples to research local property and both parties' mortgage raising capacities, independently consult a family solicitor to find out where they stand and then work through the figures (perhaps with the help of a mediator) to find a way forward that can work for all the family. Once your friend knows the options in her particular circumstances she can negotiate/mediate from an informed position.

Just wanted to echo what STIDW has posted.

Also to say that there are 2 reasons why the value of pensions is discounted when used to off-set the value of other assets. The first is delayed receipt (someone getting a house can enjoy the whole of the asset immediately, whereas someone with a pension gets theirs over time), the second is tax.

In the case you have mentioned, provided the husband can now take his pension income the question of delayed receipt is less relevant, although taking all of the pension out as one lump sum is not tax efficient, so the tax deduction would be greater.

Everything else being equal, you couldn't offset the pension in your case against the value of the house, but as STIDW mentions, there are many reasons why a split is not equal.

Thank you both for your replies.

We are in very very interesting and new times! For example for bankruptcy I think your pension used to be ignored even though you could ge
it subject to a 55% tax charge. Very shortly many people 55 and over will be able to get hold of their pension but with 75% of it taxed at 45%, 40% or 20% (or zero if you have no other income) so it may well become an asset you can have rather than a future possible pension you might never draw.

I think under current rules it's classed as worth about a fifth of its cash value in terms of set off against cash now and may be in fact the husband will want 100% of the cash and let his wife have 100% of his pension of course - no need ot be sexist about who gets the cash in hand.

Thank you Jilly. My friend has since discovered it is in fact an annuity, rather than a pension , her h is on a very high salary compared to my friend, and he is likely to be working for 9 +more years. Will these new facts change the advice given? She has since found a solicitor who has said at the very least her starting point will be 60-40 on the information she has provided thus far.