What We Do
Collins Pension Actuaries provides Pension Sharing Reports that assist solicitors and their clients in reaching a settlement with regards to pensions on divorce.
Collins Pension Actuaries website will provide useful details and information for divorcing parties about what is involved in the process of Collins Pension Actuaries preparing a Pension Sharing Report for them. The website serves as an objective reference tool for family solicitors, barristers and District Judges for issues that arise from pensions on divorce.
Pensions are very often the most valuable and least understood of the matrimonial assets. Pensions are far too complex to be summarised in the 5 relevant boxes provided in part 2.13 of Form E (the pensions asset information section of the Financial Statement Form required as part of formal disclosure in divorce cases). Furthermore, Form E is most likely to have been completed by lay people interpreting complicated and oftentimes confusing information supplied by pension providers. Bluntly, this means there is a real risk of misunderstanding the nature of the pension benefits or omitting significantly valuable pension assets from the matrimonial pool. The chances, therefore, of reaching an appropriate settlement with regards to pensions based upon Form E alone are materially diminished. The most appropriate solution for the divorcing parties to make an informed decision in respect of their pension benefits is to obtain a Pension Sharing Report.
Understanding what benefits are provided by a pension scheme is complicated, particularly in respect of defined benefit schemes, so it is advisable to involve a pensions actuary to assist in setting out each party’s pension entitlements. This will ensure the parties are fully aware of what pension income each can expect upon retirement and how to reach a suitable settlement on divorce.
The value of a divorcing couple’s combined pension assets generally far exceeds the equity in the matrimonial home. People are unlikely to spend hundreds and thousands of pounds on a home without taking appropriate financial advice, undertaking detailed research and having an expert provide a thorough survey of the property concerned. Yet despite this caution with property, in many cases, when it comes to pensions and divorce, all reason goes out of the window and the parties involved take no advice at all about their pensions in reaching a settlement and leave this significant issue to lay people to determine.
The consequence is that one or other party risks losing significant amounts of money to which they might otherwise have been entitled. There is rarely a second chance with pensions on divorce and so if you do not make an informed decision for your settlement not only do you lose peace of mind but you could potentially lose significant pension assets.
Collins Pension Actuaries provides Pension Sharing Reports to enable solicitors and their clients to make an informed decision in the settlement of the divorcing parties’ pensions.
It is not for Collins Pension Actuaries to say what you as divorcing parties should do. However, Collins Pension Actuaries will cut through the misunderstandings that lay people have of pensions and ensure the key issues are considered. This saves valuable time and money in the long run. How you decide to settle in respect of your pensions is up to you. There is no right, but you need to avoid the wrong way. The way to settle is by making an informed decision and this can be facilitated by having a Pension Sharing Report prepared by Collins Pension Actuaries.
It is tempting to think that even if there are no disagreements between a divorcing couple as to who should receive which assets then there must be no need for a Pension Sharing Report. This is perhaps the most unfortunate of situations because well-intentioned parties can still lose out due to misunderstanding the pension benefits. By involving Collins Pension Actuaries from the outset the parties will be able to accurately assess their options when it comes to Pension Sharing or Offsetting to ensure that the intended settlement is achieved.
Our Pension Sharing Reports are intended to assist the parties to achieve a more complete and better understanding of their combined pension assets. This is invaluable not only in reaching a settlement for divorce, but also for the parties to gain a realistic understanding of their future retirement income and to assist in planning for their future following divorce.
Single Joint Expert
In the majority of cases, Collins Pension Actuaries will be instructed on a Single Joint Expert basis.
Instructing Collins Pension Actuaries on a Single Joint Expert basis means that both parties are able to benefit from comprehensive guidance and assistance to help them understand the impact of Pension Sharing Orders and Offsetting and the options available from the pensions following divorce.
Collins Pension Actuaries offers a strictly objective approach to the pensions involved regardless of who the instructing party is and prepares its Pension Sharing Reports with its overriding duty to the Court in mind.
Understanding The Pensions
A vital aspect in the preparation of a Pension Sharing Report is knowing which questions should be asked of pension schemes to ensure benefits are fully understood for the particular circumstances of the case at hand.
Even if the correct questions are asked it is still necessary to have the analytical skills of a pensions actuary to process the information provided.
Family solicitors should guard against assuming that what applies in one divorce case will apply in another since even such a simple thing as a small difference in the age of the divorcing parties from one case to the next can mean that the options with regards to the pensions are very different.
A significant benefit of obtaining a Pension Sharing Report from a pensions actuary is to be guided through the minefield that is Pension Sharing, particularly when there is more than one pension involved. It is important to ensure that the choices provided by the pension schemes with regards to Pension Sharing are fully understood and a suitable option is chosen.
Once all of the pensions information has been provided by the divorcing parties, Collins Pension Actuaries prepares a comprehensive Pension Sharing Report guided by the instructions that discusses the features of each party’s pensions and how they can be Pension Shared or Offset so that an appropriate settlement is reached.
In Simple Terms
Our Pension Sharing Reports are written clearly and concisely and designed to be accessible to all parties involved in the divorce process. However, we understand that pensions are very complicated and that the divorcing parties might have further questions once the Pension Sharing Report has been received. Collins Pension Actuaries will address any questions that may arise following receipt of a Pension Sharing Report.
It is understood that during negotiations towards a settlement, further calculations are sometimes required to fully explore a proposed course of action. In general, if further calculations do not require significant reworking of the original Pension Sharing Report, then such calculations will be answered with no further cost to the divorcing parties.
If agreement cannot be reached after a Pension Sharing Report has been prepared, then the case may have to be settled in Court. Collins Pension Actuaries can attend Court to act as an expert witness to comment upon its Pension Sharing Report, although this would incur separate fees which would be advised at the time.
It is our view that Collins Pension Actuaries should never have to appear in Court since we will always provide further calculations or clarification to ensure our Pension Sharing Reports are fully understood by the parties.
What Is Included In A Report?
A Pension Sharing Report from Collins Pension Actuaries will provide calculations to indicate which pensions could be Pension Shared and in what percentages. If Pension Sharing is not required then the equivalent values of those Pension Shares for Offsetting purposes can also be provided.
It should be noted that a Pension Sharing Report is not a magic solution to resolve past inadequate retirement planning or create money from nothing or make parties both retire from age 55 with a pension of £25,000 per annum for the rest of their life. It cannot achieve all things at once and it cannot cater for a range of future options. It most certainly cannot provide absolute equality whereby each party has identical pension assets with identical options and pension income and tax-free cash sums.
These comments are not meant to be flippant, but are stated to keep at bay the oftentimes unrealistic expectations that divorcing parties might have with regards to their pensions when they request a Pension Sharing Report.
A Pension Sharing Report is designed to enable an informed decision to me made and an appropriate settlement to be reached by the divorcing parties.
Listed below are some of the issues that could be covered in a Pension Sharing Report:
- Pension Sharing based upon Equality of Value: this approach to Pension Sharing divides the pensions to broadly allow each party to have the same value of pension benefits using the value of the pensions provided by the relevant pension providers. The actual pension benefits, such as the income from the pension and the retirement age from which it is received, will differ depending on factors such as scheme design and the age of the person receiving the pension.
- Pension Sharing based upon Equality of Income: this approach to Pension Sharing divides the pensions to broadly allow each party to have the same pension income in current terms from the pensions. However, different pension scheme design will 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 and even then it is most unlikely to occur in practice. This is because other complications, such as the rate at which pensions increase before and after retirement, affect the future amount of pension income received. Such increases can rarely, if ever, be compensated for to allow actual equality of income to be achieved.
- Offsetting: if Pension Sharing is not the desired option then the equivalent value of those Pension Shares for Offsetting purposes can be provided. Offsetting is where an amount of money 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 that would otherwise have been chosen. The equivalent values for Offsetting purposes 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 non-pension assets, such as the matrimonial home, in lieu of a lower share of the pensions.
- 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 or after the date of cohabitation and up to the date of the relevant pension benefits.
- Other Specific Requirements: as far as is possible, the Pension Sharing 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 will provide a very wide range of Pension Shares. However, 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 could be argued that a lower Pension Share would be desired by the person whose pensions will be Pension Shared whereas a higher Pension Share would be desired by the person who will receive the Pension Share. Having a range of Pension Shares inevitably means that a compromise is required. In our opinion, in general, the pensions should be Pension Shared based upon the appropriate normal retirement ages of the pensions concerned since this generally achieves that compromise Pension Share.