Can someone explain my pension please?

[flippingstupidnickname]

Hi all,
I will take legal advice but for now I want to ask here as my brain is running around in circles.

I have a final salary pension with an accrual rate of 1/60. I'm proceeding with a divorce. Assuming my H gets 50% for, let's say 10 years of marriage, how will that affect my final pension amount. I understand that H would get 50% of the CETV to put in his own pension scheme. Am I right in assuming that the overall impact on my pension would be worked out based on an accrual of 1/120th over the last 10 years? Or is it worked out completely differently?

My biggest fear is that it means I would actually end up with just 50% of my pension (even though I plan on continuing to pay into it for another 20 years)...

Did your STBXH give up his job ten years ago in order that you could pursue your career? Is he too old or infirm to earn money for himself going forward and accrue a pension pot?

No, Cog, none of those things. But a solicitor has told me that he's still entitled to half. I really need to find out what it will actually mean in monetary terms before I decide whether I can be arsed to question it.

Technically, your solicitor is right. However, the usual situation where pension pots are taken into account is where, for example, an older couple are getting divorced, the wife has spent 25 years raising the family and supporting the husband's career during which he has amassed a huge pension pot and, if he takes it all with him, the wife is condemned to a meagre retirement. If it's a younger couple, both employed, both capable of providing for their own retirement, both in pensions schemes, it's usually not part of the discussion.

Are you mediating privately?

No, we're trying to agree on everything with as little cost as possible. A friend gently pointed out to me that I have financially benefited in a round about way from H not paying into a pension over the years and I guess he's right. I need to figure out if the financial detriment to me is worth fighting for.

Can I ask how far off retirement you both are? And why did he decide not to contribute to a pension of his? Was he relying on you to retire with a good pension.... was it a plan you consciously agreed to between you?

Have you taken anything out of the family finances and put it into the final salary scheme?

You can't physically take anything out of your pension scheme to give him, of course. So your final pension amount will remain exactly the same. All you can do is compensate him (if appropriate) by accepting a slightly lower share of other marital assets such as equity in your home or maybe savings.

I'm in my early 30s and he in his early 40s. The money I paid in was all from my salary. I guess he was relying on my pension but we never had a proper conversation about it. The Pension guy I spoke to said that he would have a propertion of the Cash Equivilent Transfer Value paid into a separate money purchase scheme so I'm trying to figure out how that will affect my final salary pension amount. He tried to explain it to me but I still didn't quite understand.

The cash equivalent transfer value is the book value of your pension as it stands today. It is a statement of what it is worth if you were to transfer it into another scheme. You have no physical access to your pension until you retire. You can't take the money out, give it to anyone, spend it .... it's just a number on a piece of paper at this stage.

What your solicitor is saying is that you will may have to compensate your STBXH a proportion of that number. As you can't physically take money out of your pension it would have to come from somewhere else... i.e a lower claim on other marital assets. Your final pension amount will remain unchanged at the end of the process.

As he is in his early 40s he has 25+ years to build up his own pension. So his claim on yours should be very small.

Actually cogito that is totally wrong! Of course you can access pension money in divorce and OF COURSE it's part of the assets to be divided. FS schemes are so valuable it irrelevant how or who funded it.

The court (never done it without but may be possible by agreement) can make a pension sharing order and a portion of the CETV can be given to your STBXH to invest in a pension to provide an income for him when the time comes. Splitting a FS pension is perfectly possible. What is less attractive is an earmarking order. Is this a company pension (not local gov etc?)

OP if your divorce and settlement is final your pension will acru as normal for here on, depending on what you husband gets to take, this will cut your accrual to date. (He takes half, you're left with half your entitlement to this)

Excuse typos... bloomin fat fingers

I stand corrected. I didn't think pensions were released before term for any reason. Nevertheless, the money involved could be compensated for in other ways that don't affect the OP's pension. She doesn't have to raid her retirement fund if she can give him a bit more out of the house sale, for example.

So would it be right to say my final pension payments would be based on 10 years of an accrual rate which is half what it usually is (ie 1/120th as opposed to 1/60)? If that's correct then it actually won't make THAT much difference (I calculated about 3,000 a year difference). Does that sound about right?

Cog, if I compensated in other ways he would basically get 100% of the house so it's not an option unfortunately...

Basically yes, the actual calculation could be done differently depending on scheme rules. The CETV would indicate the actuarial valuation of your benefits, he takes half, you've got half left. Check with the trustees about the final calc though.

BTW CETV's rarely offer good value this far from retirement, it's possibly worth more than the monetary figure shows, but if you can't deal any other way, then it is what it is - you're residual is worth more than his half though.

Just to say whoosh is entirely right. If your STBXH were awarded a 50% pension share your pension earned up to the point the court order takes effect (usually date of decree absolute) would reduce by half but any increase in value in the future (either extra 1/60ths earned, or the effect of salary increases) would be unaffected.

Cogito in a sense this sort of order doesn't contradict the principle of early release - an ex-spouse who is awarded part of their ex's pension has to put that money straight in a pension - they can't just spend it unless they are 55+.

Quite apart from the advice given here, you should remember that it's not a given that he is entitled to half your pension up to now.

His salary, effect on his salary of your marriage/dc etc, opportunity for a pension and savings all play into it. How close are your salaries? With him beig ten years older had he any pension plans/thoughts/opportunities before you came along?

I have always earned more until the last year when I went part time to care for the children. When we met he didn't have a pension and has since paid into two very small pensions for a very short amount of time. Over the years I have also financially supported him when he has made attempts to be self employed. He now earns slightly more than me although a fair amount of that is commission based.

And although he has earned less in the past, he has always earnt an amount that would have allowed him to pay into a pension if he had chosen to do so.