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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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