OK, you have the pension CETV and are persuaded it is the appropriate valuation to use. Like my last Blog on CETVs, this article is mainly for lawyers from other firms who do not specialise in family law and who need some basic guidance on this complex area. If you are not a lawyer, this article on pensions and divorce is likely to be more helpful.
The next step is to consider what % of the pension rights should go to whom. It is not an easy question!
I suppose it might be assumed that the obvious route is to simply do what is necessary to make the two people’s pension rights equal. Certainly this is a common approach. But how do you do that? It seems to me this can be done by:
1. Dividing the CETV by two to give equal CETV figures each
2. As commonly one party is expected to live longer then obviously they would need a greater share of the pension to keep the same level of income. So, you might then arrange an unequal division of the CETV to achieve an equal outcome, in other word by reference to the benefits on retirement.
I cannot presently find any rule or case that gives real guidance about what approach there should be to given case facts. The Court of Appeal dealt with a case of Martin-Dye and decided to apply the same % as they had used to deal with the rest of the marriage capital but I do not discern any consideration of point 2 above within the judgment.
But for years, in fact since the Matrimonial Causes Act 1973, the Court has been told to take account of the parties resources now and in the foreseeable future so it is surely the case that a fair division of the benefits is entirely foreseeable.
In reality, a simple division of the CETV is often likely even if only due to (rightly or wrongly) client concerns about the cost of a specialist pension expert looking at the issue of equal outcome by reference to benefits on retirement. Is the potential benefit of that approach proportionate to the monies involved? Are you sufficiently capable to make that decision?
Personally, I would tend to advise getting a pensions expert involved at a very early stage, but it is certainly necessary when considering pursuing the “equal outcome” approach.