We all know that when a couple divorce, any pension funds need to be included in the final settlement. But at what value?
Whether you look at pension sharing, earmarking or indeed offsetting, you still must work to a value, and that’s where the difficulties might come in. If you are talking about a money purchase scheme or defined contribution (DC) scheme, the value is based on the underlying value of the assets it is invested in. That part is straightforward.
The difficulties come from a defined benefit (DB) scheme; sometimes known as an occupational or final salary scheme. Values given for a DB scheme are based on a whole series of assumptions that the scheme actuaries will make. You need to remember they make these assumptions based on the whole scheme and all of its members. It may be necessary therefore to ask if the actuary could provide a specific valuation based on current information, as opposed to historical data.
Once this has been done and you have more up-to-date information on the scheme as well as a value, it may be worthwhile considering moving a DB scheme into a DC one. That could make the whole separation proceedings a lot easier. This would also clarify values in the process, so may be beneficial.
When you are looking at a DB to DC transfer, you need to involve what is called a Pension Transfer Specialist (PTS), which is someone who has passed the PETR examinations and knows exactly what the FCA are looking for in terms of quality of advice. We are pleased to say MAP has advisers who are PTS’ and so can help you and your clients decide on the best route to go.
If you would like to discuss any investments with Money Advice & Planning Ltd, please contact us today on 0345 241 1808 or e-mail us at firstname.lastname@example.org.
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