Beaufort Asset Management > Relieve Divorce Strain With Advice On Division Of Pension Rigts

Posted on August 26, 2013


From David Lane, Senior Technical Consultant at AXA Wealth:

Offsetting allows the ex-spouse to receive non-pension assets, such as the matrimonial home, which have an equivalent value to the pension rights. This is a favoured approach in collaborative divorce whereby both parties work with a financial neutral and agree how to share the matrimonial assets.

It is crucial to have the right experience in valuing a member’s pension entitlement in order to deliver an effective solution. A common method to value a member’s benefit is to request a cash equivalent transfer value (CETV). This is relatively easy to obtain, but in certain circumstances it can undervalue a member’s entitlement, for example, by not taking into account any future salary increases or discretionary benefits. An alternative valuation method to a CETV may be more appropriate.
Further options include considering a past service reserve, which is a method of valuation that takes into account reserves established for long-serving members; and a share-of-fund basis, which calculates a member’s equitable share of the assets if, for example, the fund was wound up. This latter approach can work effectively when dealing with small self-administered schemes.

Read more at Beaufort Asset Management.