Defined benefit or Final salary pension arrangements
If you're in defined benefit (final salary) pension arrangements, the process could take as much as 6 weeks. It could take longer if your pension benefits are particularly difficult. However, you will be up to date about progress.
For a defined benefit pension, the CETV is calculated on a basis decided by trustee directors, on the advice of the Scheme actuary and in accordance with the law. The theory behind the calculation is if the CETV was reinvested and the assumptions underlying the calculation are borne out, it should be enough to provide the same benefit at retirement as the benefits provided under the pension scheme (although there is no guarantee this will happen).
Defined contribution or money purchase arrangement
If you belong to a defined contribution or money purchase arrangement , the process can take less than 6 weeks. The CETV is just the face value of your retirement account at the date of the quotation. You can request one CETV quotation in a year for divorce and pension purposes. The Trustee often reserves the right to charge fees for any extra requests within this period of time.
Can the CETV be guaranteed?
The CETV quotation isn't always guaranteed and may therefore go down or up over time. This will happen for a number of reasons. For example:
- A change in calculation expectations during the period between your CETV being produced and your divorce being finalised. The CETV is sensitive to changes in economic conditions (interest rate etc) and a change of +/- 20% over the course of the divorce process is not unusual.
- The expectations may also updated from time to time to reflect other considerations, eg longevity, which has an impact on the value of your pension.
- Changes in investment returns that may affect the value of your defined contribution account (including further voluntary contributions).
- A change in personal circumstances, such as retiring or becoming a deferred pensioner, in which case the benefits will reflect your new status.
About the Author:
Information courtesy of Adviser Hub. If you want help with your pension valuation or wish to know more about the topic of pension sharing, it is advisable to seek advice from a qualified pensions adviser.
1 comments:
I have been waiting for a cetv figure for three and a half months. And still no sign of it. I have been lied to on every phone call made which have been 15 calls to the scheme administrators.
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