The Services provided by Collins Actuaries for Pensions Advice on Divorce in England and Wales

Background and our Objective

The objective of Collins Actuaries Pensions Advice on Divorce is a simple one. We wish to assist solicitors in giving their clients the best possible advice regarding pension sharing and pensions generally in the circumstances of divorce.

For many years now pensions have been growing in importance. In many cases the pension is the most valuable asset in a marriage, frequently being of much greater value than the family home. Pensions are not marketable and cannot be dealt with in the usual way of estimating market value as with other assets. Pension sharing enables the ex-spouse for the first time to share fully in the value of this asset.

Partly because of the complicated nature of pensions and partly because of the difficulties of arriving at a value for pension rights, pension sharing is fraught with potential pitfalls. Using an external pensions specialist such as Collins Actuaries ensures that the client receives sound advice.

Collecting the Data

Our experience is that pension scheme members vary enormously in their knowledge and record keeping concerning their pensions. At one extreme there is the type of person who has kept nothing and understands very little about his/her pension. At the other extreme there is the type of person who has kept all the documents he/she has been given and is well aware of the benefits that he/she is entitled to under the pensions arrangements.

Our service is flexible enough to cope with both these extremes and, of course, the in-between situations. One of the risks is that pension entitlements from possibly long-past employments are forgotten. We have found that the safest way to ensure that no pensions are omitted is to start from an employment record. Naturally, any documents that the person has kept are always useful in addition.

In order to use our service all that needs to be done is to complete, as far as possible, one of our "information collection forms". It is also helpful to have any additional documents that the client can provide regarding pension arrangements.

We also need letters of the authority from the client to enable us to obtain the information from the pension scheme or pension provider and the Inland Revenue. Where the client is the spouse of the pension scheme member ideally we would also like a letter of authority from the person with the pension rights.

Preparation of our Advice

We first contact all the pension schemes and/or pension providers. Usually, as long as we know who the employer is, we can make contact with the pension scheme.

We will obtain details of the following from the pension scheme or pension provider:

  • Determine the type of pension arrangements involved, for example final salary schemes, money purchase schemes or personal pension policies.

  • Information about the benefits that the member is entitled to, for example the pension earned to date, spouse's benefits, retirement ages, service dates, and pension contribution histories.

  • A valuation of the pension on the pension scheme's own basis, ie the Cash Equivalent Transfer Value (CETV) and the basis on which the CETV has been calculated.

  • The options that are available to the former spouse, that is whether the internal option is available, and whether or not it is the only option. If the external option is available which company has the pension scheme selected as its default provider, and the terms that the default provider offers.

  • The pension sharing charges made by the pension scheme.

  • Whether or not the scheme is underfunded.

  • Details of any Guaranteed Annuity Rates.

    Our Advice Before the Decision Regarding Sharing

    We will then write to the solicitor and provide him/her with detailed guidance on the process that needs to be followed. Attached to this letter will be a Report, which will contain the following:

  • A schedule detailing the rights under the pension schemes and policies.

  • Details of the methods of settlement open to the client, and what the effect of each will be; this will enable the solicitor to advise the client in the context of the couple's general situation and the other assets in the marriage. It will set out clearly the pros and cons of offsetting compared with pension sharing.

  • Clear advice regarding any special features of the pension scheme rights or the calculation basis that should be taken into account in giving advice to the client.

  • An analysis of the different methods of pension sharing which are available to the client, explaining what the result of each would be.

  • The costs of pension sharing and the options regarding the means by which these costs can be met.

    Our Service After a Decision to Share is made

    In general, Collins Actuaries finds that solicitors themselves are happy to carry out the implementation of the pension share.  If required, Collins Actuaries can help in providing draft wordings for the necessary order to the pension scheme, and dealing with any questions. Collins Actuaries will also help in ensuring that the relevant scheme has implemented the share in accordance with the Pension Sharing Annex.

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