What is included in a Pension Sharing Report?

Collins Pension Actuaries Pension Sharing Reports can provide figures to indicate which pensions could be Pension Shared and in what percentages, as well as the equivalent Offsetting figures of those Pension Shares, to achieve the following:

  1. Equality of Value: this divides the pensions to allow for each party to have the same value of benefits based upon the value of the pensions provided by the relevant pension providers. The actual benefits, such as the income from the pension, will differ depending on factors such as scheme design and the age of the member.
  2. Equality of Income: this divides the pensions to allow for each party to have the same income in current terms from the pensions. However, different pension scheme designs very often mean that the actual income received from the pensions is payable from different ages. Hence, equality of income is only achievable once all pensions have come into payment.
  3. Offsetting: if Pension Sharing is not the desired option then the Report will provide the equivalent value of those Pension Shares for Offsetting purposes. This means a lump sum is calculated, which would be paid out of non-pension assets from one party to the other, that is equivalent to the relevant Pension Shares. The Offsetting values provided will be a range of values and not one specific value. Offsetting is subjective and different pensions on divorce practitioners take different approaches. Offsetting allows one party to retain more of another asset, such as the matrimonial home, in lieu of a lower share of the pensions.
  4. Proportion Married Calculations: the percentage Pension Shares and Offsetting figures can be adjusted to account only for those pension benefits that are estimated to have been earned between two dates, such as after the date of marriage and before the date of separation.
  5. Other Specific Requirements: as far as is possible, the Report will allow for specific requests made in the letter of instruction such as considering Pension Shares at a range of retirement ages. However, such specific requirements are generally discouraged initially since it is our experience that letters of instruction very often contain wide ranging questions that do not assist in the settlement of the pensions. For example, specifying Pension Shares based upon equality of income at ages 55, 60, 65 and State Pension Age is, in our opinion, a meaningless set of questions which will provide a very wide range of Pension Shares. There can only be one percentage Pension Share. It is not possible to have a Pension Share that allows for all such retirement ages. It is probably obvious that a lower Pension Share would be desired by the pension scheme member whereas a higher Pension Share would be desired by the non-pension scheme member. In our opinion, in general, the pensions should be Pension Shared based upon the normal retirement ages of the pensions concerned since this is the most likely age at which the pensions would have been taken had divorce not occurred.
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