How To Get A Pension Valuation For Divorce
Last Updated:March 27th 2022 Table Of Contents
When it comes to calculating a financial settlement in a divorce, all the relevant assets need to be added to the ‘matrimonial pot’ which is then divided between the divorcing couple.
One of the most important assets, after the family home, consists of the pensions of either or both parties.
As such, being able to accurately obtain a pension valuation for divorce is crucial to achieving a fair outcome in a divorce financial settlement.
The aim of this article is to explain how to get a pension valuation for divorce.
How do I find out the value of my pension?
Many people are unaware of the value of their pension at any given time.
Although pension providers generally issue annual statements that show the amount of pension income that will be paid on retirement, these do not always provide information about the current value of a pension (i.e. to enable calculation of how much needs to be added to the matrimonial pot).
Cash Equivalent Transfer Value – CETV
In order to calculate the value of a pension for purposes of achieving a divorce settlement, the ‘cash equivalent transfer value’ (CETV) is required.
The CETV is essentially the amount that the existing pension provider would need to transfer to another pension provider if a transfer were requested as part of a pension sharing order.
If the CETV is not contained in the annual statement or a more current figure is required, this can generally be requested from your pension provider (in the case of defined contribution or money purchase pensions and personal pension).
In the case of a final salary or other salary-related pension schemes, although a CETV can be requested, it may not provide a very accurate valuation – so it may be worth seeking advice from a financial adviser.
If you have a personal pension you should be able to see your pension worth and your ‘transfer value’ on your annual statement.
It’s important to know that the majority of schemes will charge you a fee to provide these values, some can be rather high.
NB: In Scotland, the pension must be valued on the date of separation, and only the value that has been built up during the marriage is taken into account.
How much of my pension is my spouse entitled to?
Courts will normally add the value of private pensions (both occupational and personal) of both husband and wife to the matrimonial pot.
Pensions are regarded as matrimonial assets, which are treated differently from other assets, such as inheritance, property owned before marriage, and investments for example.
When you get divorced, the value of any pensions will be divided up as part of the overall pot, with a starting point of a 50:50 split.
You’ll need to apply to the court through a financial order if you wish to split your pensions. You need to consider your options and compare pension sharing vs pension offsetting, as both options have pros and cons.
The exception to this rule is where one party had already built up a significant pension prior to the marriage and the marriage was short.
NB: The New State Pension cannot be shared after divorce and neither can the Basic State Pension – but the Additional State Pension can potentially be shared.
Pension rights after divorce in England or Wales
In England or Wales, all workplace and private pensions are included in divorce settlements, whether built up before or during the marriage, and consequently become part of the ‘matrimonial pot’. Both parties therefore have the same pension rights after divorce regardless of whose name is on the pension plan.
How are pensions split in a divorce? The outcome will depend on what has been agreed between both parties and/or ordered by the court. Once agreed and sealed by a Judge the court will issue a court order which sets out what proportions will be transferred from one partner to their ex-spouse.
Pension Divorce Calculator
Unfortunately, we do not have a pension divorce calculator, but we can advise on what information would be needed to work out how to calculate pension value for divorce.
You would need to know the following:
- Workplace pension values (current and historical)
- Additional State Pension but not the basic State Pension value
- Personal Pension value
- The estimated value of your property & how much is left on the mortgage
- Money & other asset values
How are pensions shared if one party has already retired?
If one of the former spouses has already retired, it is still possible to split the pensions, but there are slightly different rules. In particular, it is not possible for one party to take a lump sum from their ex-partner’s pension if it is already being drawn.
Pension Sharing Orders
Many couples are put off pensions sharing orders due to extortionate fees solicitors charge to draft them however, pension sharing orders are actually just an additional element that’s included in a financial consent order.
We can offer a Solicitor Managed Consent Order for just £599 fixed-fee including VAT. It would cost £2,277 + VAT to obtain a consent order of this complexity from a solicitor in your area and would take on average 20 weeks.
Using our service we can help you save over £2,000 plus you will obtain your pension sharing order through the court up to 12 weeks quicker.
