Trying to avoid a Pension Sharing order

My friend has a local government pension worth £97,500 and additional small pensions, taking the total to £105,000. Her husband has a single pension worth £162,888.88. Is the only way of settling these assets a pension sharing order?

The difference is £57,888.88. Is it reasonable for my friend to request half of that amount as a cash payout and leave both pensions intact? It seems very complicated and expensive to assess each pension and offset them against each other.

The husband has offered my friend a cash payout of £13750, which she feels is too low. He has argued that she would be able to invest this money, which is why it is less than the 50% difference share. He has said that she could have £27,500 when the pension becomes available in 10 years' time but that doesn't account for any growth (at 4% pa, £27,500 would equate to £41000), which is clearly not fair.

If this situation does require a pension sharing order, are the costs and fees just equally shared?

>>The difference is £57,888.88. Is it reasonable for my friend to request half of that amount as a cash payout and leave both pensions intact?

No, it isn't. Money in a pension is not equivalent to cash. If you doubt that then consider that pensions suddenly became worth a lot less when Trump announced 'Liberation Day'. That can happen to pensions at any time quite apart from the fact that 75% of a pension is taxed upon withdrawal (assuming the rules don't change which they have a habit of doing). It may be reasonable to ffer some cash instead of sharing pensions when the difference is not that huge. However, the cash equivalent isn't anywhere near half the arithmetic difference. And, of course, there is also the difference that cash now is very different from a benefit to be taken perhaps years hence.

Sounds like my friend and husband need to enlist the help of a Pension on Divorce Expert (PODE) to do a proper pension evaluation comparison and then either agree an offset or use this as the basis of a pension sharing order. Thanks for your help.

Well, I am not sure they need to do that. Obviously they can if they want but the difference in pension values here seems to be £57,888.88 (which presumably fluctuates almost daily). A cash equivalent would not be half (£28,944.44) for the reasons I have already explained so we are talking about a figure probably nearer £20,000. That is not really a life changing sum. Many people do agree on the basis of, say, "I will offer you £20,000 (or whatever) in lieu of a pension share'.

Spending money on some expert to come up with an artificially exact sum (say £20,791.45) is something they are entitled to spend money on but many people would not bother and come to a pragmatic figure they can both live with.

The so-called Office for Budget Responsibility forecast many things last November but by March of this year none of them were correct (by big margins). It is much the same with pension forecasts. They are based on assumptions and best guesses. That is not to say that arguments can't be based upon them (and they usually are) but treating them as Gospel is a mistake. That is one of the reasons why many people come to pragmatic agreements (especially when the amounts at issue are not life changing).

That is more in line with what she was hoping. She has been offered £13K so if that can be raised to say £20K I think both parties would be happy without having to incur cost. My concern was that the court would review the agreement and ask for evidence to support the amount to be paid, or with a sum this low are they simply going to accept it as part of a clause in the financial order?

>>My concern was that the court would review the agreement and ask for evidence to support the amount to be paid, or with a sum this low are they simply going to accept it as part of a clause in the financial order?<<

Obviously if there is a disparity of pension provision a court will consider how that is addressed. And there is space on the fiinancial form which accompanies a consent order to explain that. However, a court will not require a pension sharing report as evidence. Provided what is proposed is broadly reasonable within a broad range a court will not normally object to an agreement - especially if it is clear both parties have had the opportunity to take legal advice (which is not the same thing as having actually done or or having followed that advice).