Terry & Co Home

Welcome! Log In Create A New Profile


CETV or Specialist Report

Posted by Craig638 
CETV or Specialist Report
May 22, 2021 06:33PM
Currently going through the pleasures of divorce after 30 years of marriage. We have a home with no mortgage left to pay (wanted divorce as soon as I paid the last 80K off), no savings and both children over 20. My ex is a NHS Grade 6 nurse with 7.5 years service and has 2 years of reserved pension from the late 80’s, she is 53 this year. I am 52 this year and have a half military pension preserved until 60. The CETV of my pension as of this year was £110k. Her CETV has just come back and valued at:
£9,221 on the 1995 scheme for 2 years, £8291K for 2008 scheme and 39,838k for 2015 scheme a total of £57,350. Hence 52,650 lower than mine.

I was somewhat surprised that her valuation was so low considering she had contributed to it, unlike my military pension. From the little research I have done I have read that CETV’s are often undervalued. My pension is has been frozen since leaving service in 2000 and only increases with inflation, hers will continue to increase with contributions providing she remains in the scheme and retires in her mid 60’s. I am considering seeking a specialist report which may not even things up. Due to the situation I returned from working as a humanitarian in some of the worlds most volatile countries several months ago, and really don’t want to have to start all over again.

As it stands our home is worth 200k, and my interpretation is to keep my pension intact I will have to give up 25k of equity in the house. Are these fair assumptions and any advice on the pension issue most welcome.

For those going through the pain of divorce my thoughts are with you to.
Re: CETV or Specialist Report
May 23, 2021 07:06PM
A report from an actuary will cost you about £2,000 to £2,500. On these figures that cost is significant.

Cash and CETV in a pension are not the same thing so dividing the £52,650 difference in your pensions by two does not mean that it would be appropriate to sacrifice £25,000 of equity in order to keep £25,000 worth of pension CETV.
Re: CETV or Specialist Report
May 23, 2021 10:11PM
Hi David,

Than you for the response and would like to add having read many posts on here that I commend the fact that you take time to respond to most if not all posts, providing frank responses to individuals. Interestingly I looked at her NHS CETV this afternoon in detail. As mentioned above they provide the CETV for each, however I noted that within each forecast there is a breakdown as shown below. Which indicates to me if i add the currently colums ( pension of and spouse pension of) the total equals £5494.65, which is £119.71 less per year than mine? I am now wondering is this makes more sense given she has 9 years NHS and I have 12 years MOD, it makes more sense to me. My other concern is mine kicks in at 60 and hers 67 if she works until then, she didnt start work in NHS until 7 years ago. So can I shoot myself in the foot even more if I go for actuary valuation?
Breakdown within NHS CETV. MOD pension only provides Total value, not broken down factoring in spouse
Alternative benefits in the NHSPS 1995 Section of the Scheme
...................................At leaving...........Currently
A pension of................£179.82............£447.14
A lump sum of............. £539.46............£1341.42
A spouse Pension of.......£46.21........... £114.91

Membership and Pay Details for the 2008 Section of the Scheme
......................................At leaving......Currently
A pension of...................£573.79........£573.79
A spouse..Pension of.....£215.17........£215.17

2015 Section of the Scheme
.........................................At leaving.......Currently
A revalued pension of........£3,098.05.....£3098.05
A spouse pension of......... £1045.59.....£1045.59

Edited 3 time(s). Last edit at 05/23/2021 10:18PM by Craig638.
Re: CETV or Specialist Report
May 24, 2021 10:13AM
I am sorry but although it has probably taken you a little time to post these figures the fact is that they do not mean much to me because they are just figures with no meaningful context. They do, though, perhaps underline the fact that these seem to be quite modest pensions so you and your wife might benefit from taking a broad brush approach.

What will probably determine the outcome is what you each earn (which determines your respective mortgage capacities) and what you each want (which determines what sort of outcome will fly).
Re: CETV or Specialist Report
May 24, 2021 11:04AM
Again thanks, we both now earn very similar salaries, all in all there is a very equal footing across the board, but as you pointed out it makes sense to retain the capital and potentially take the slight hit on my MOD pension if that is the case...
Re: CETV or Specialist Report
May 24, 2021 07:53PM
You need to ignore the spouses pension, that is notional amount that would be payable to any surviving spouse of your wife, her pension on those figures would be £4,118.98 plus the lump sum payment.

As a general rule off thumb, the cash equivalent transfer value would be based on how much it would cost to purchase the same level of benefit on the open market. So, for example for your wife every £1 of pension would cost £3.50, then the CETV of her fund would be £14,416 (these are hypothetical figures, it is all based on your wife’s age and what benefits her scheme provides, such as inflation proofing or an6 other guarantees and subject to other tweaks)

The difference you need to focus on is the difference in the CETV’s as at now as that is what the current values are. As David says though, £1k f rom a pension fund is not the same as £1k in cash now. You can’t generally access pensions until age 55 and rising to 57 and then not all of it is tax free. In the overall scheme of things given your ages those values are not really that significant to be throwing money at.
Re: CETV or Specialist Report
May 26, 2021 09:13PM
Cheers AndyK, so from that and what i understand her CETV may be for example 50k less than mine ( main reason i understand is because my Armed forces pension kicks in at 60 and her pensions kick in at 67 (first one at 60) and that the CETVs use the 80 year life expectancy mark, hence for me 20 years for her 13 years... So bottom line, dont pay 26k to save my pension, at worst agree on a PSO at best, negotiate some equity into her from house but nothing like 26K..?
Re: CETV or Specialist Report
May 27, 2021 01:18PM
Very loosely yes, the calculations can be complex but it is basically what would it cost today to provide those benefits tomorrow.

If the difference in CETV’s is £26k and you want to retain your pension then you don’t want to be giving up £26k in equity or savings Given that only £25% of a pension fund is tax free with the rest being taxed at a marginal rate if she takes it as a lump sum and the fact that she won’t be able to access it until she is 55, 8 would be inclined see if she will say wha5 she is prepared to accept and work from there.
Sorry, only registered users may post in this forum.

Click here to login