Good News On Pensions In Divorce Proceedings.
Family Law Solicitors – Newcastle and Sunderland
Is there a good time to seek a divorce?
Possibly not, but if your spouse has a defined benefit (final salary) occupational pension, now is probably the right time to secure a Financial Settlement.
These pension schemes are basically a promise of an income in the future from the employer, so when we value the pension, as part of matrimonial assets, we must capitalise the value. This is known as the Cash Transfer Value (CTV). Calculating this value is complicated and is usually provided by the pension scheme trustees. In some cases it may be worth instructing an external actuary to provide an independent valuation; in fact, if you are having a pension valued as part of the divorce process we would recommend doing just that.
These calculations use gilt (a method the government uses to borrow money) yields to calculate projected returns. Gilt yields are linked to interest rates and these are very low at present, resulting in high CTVs. If interest rates were to rise, CTVs would fall, meaning that there would be a lower value to share in a divorce.
This could mean, from a Pension Sharing perspective, now is a good time to get divorced because a high-transfer value would result in the recipient spouse transferring a greater fund into their new personal pension without a corresponding high loss from the spouse member’s fund. Surely a win win situation for both of you. The spouse member’s benefits will be based on a proportion of their final salary not the amount of the transfer value.
At Emmersons Solicitors, our highly trained Family Law Team has wide-ranging experience when dealing with complex divorce cases and pension issues. We will work in collaboration with actuaries and financial planners to ensure our clients receive the best advice and guidance possible. Planning your Pension Sharing with the help of experts could gain you tens of thousands of pounds.
If you need help with your divorce or separation, then why not contact us for a Next Steps Divorce Advice Session and to see how we can help you. We can be contacted on:
Family Law Specialists Solicitors Newcastle: 0191 284 6989
Family Law Specialists Solicitors Sunderland: 0191 567 6667
or email us: firstname.lastname@example.org
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