Obviously, in a divorce case where the pension is seen as relevant (and, to my mind, that is almost always) a valuation would be needed. But then there is a need to properly understand the valuation!
I pause at this point to say that this article is mainly for lawyers from other firms who do not specialise in family law and who need guidance on this complex area. If you are not a lawyer, this article on pensions and divorce is likely to be more helpful.
Of course, the prescribed method of getting a valuation is, at first at least, via the CETV
I often argue that a CETV is not the fairest representation of the value of the pension benefits. Indeed, it might be that using a CETV is wrong in principle.
Examples of when a CETV might not be the most appropriate include:
• armed forces, police or some other public sector schemes (we deal with a lot of such cases and a CETV is probably irrelevant)
• where there are discretionary benefits
• where the CETV is not necessarily the total value of the fund (I think an example would be a defined benefit scheme)
• if a fund is in deficit (surely never seen!)
• where there is a potential surplus share or top-up
These, and other instances, may warrant the instruction of an expert IFA to consider and potentially challenge the fairness or accuracy of the CETV.
In addition, the specific facts of the case may require closer consideration of the CETV or the instruction of an expert to consider the impact of these other facts. Examples include:
• if the party with the pension rights is seriously ill
• if early retirement is being considered
• where there might be pre-marriage or post-separation benefits that have accrued
• the age of both parties
• whether the pension is in payment
It seems to me that there is a clear need for us all to be better informed about these issues so that they know when to ask for expert IFA help.