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Pension values can be
30% higher than the CETV.
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for a defined benefit scheme.
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  Pension Audit Results   "Increase the pension value
by 30% with an adjusted CETV

For complex cases a pension audit that is admissible as evidence in court can reflect the true value of a pension using a suitably adjusted CETV. Individuals that can benefit the most will be those where their spouse is a member of a final salary pension or public service scheme such as NHS, police, fire or armed forces.
  Introduction   Member income reduced   Expensive young widows
  Equalising income   Suitably adjusted CETV   Benefit of state pension

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Where a case is complex and includes a final salary pension, the pension audit will start with the cash equivalent transfer value (CETV) from the provider as the basis of the calculation. From the valuation procedure, it is possible to determine a suitably adjusted CETV that will reflect the fair value of the pension arrangements based on the specific circumstances and needs of the parties. The valuations can consider many aspects of the pension such as past service reserve, death in service benefits and future career prospects that are not considered by the CETV Method.

The individuals that will benefit most from a pension audit will be those where their spouse is a member of a final salary pension or a public service scheme such as civil service, NHS, teachers, police, fire services, armed forces but especially if they have been in public service all their working life, and in particular are now aged 45 or over. If if this individual is also 4 or more years younger than their spouse, they are likely to be a particular beneficiary of a pension audit.

The following table summarises the findings from recent cases of UK pensions on divorce. These cases were rated A (significant) from the audit rating table and the value added by the pension audit report.

Pension audit results
  Case details
Case A Case B Case C
  Audit Rating
  Married for (years)
  In main scheme (years)
  Income of member
  Initial valuation
  Adjusted value
  Value added by audit

During ancillary relief proceedings the adjusted CETV can be used by the former spouse and their solicitor as part of the negotiation process. As the step-by-step guide shows, the solicitor can make an open offer to the other party and include the adjusted value.

The percentage agreed may not be a 50/50 share of the pension arrangement but it will include the value added by the audit, thereby resulting in a significant gain for the former spouse and help the solicitor achieve the best possible result for the client.

The court will issue a pension sharing order that results in either an internal or external transfer. For a money purchase scheme, where the spouse is nearing retirement and requires an income the pension fund can be used to buy an annuity and has the option to use an open market option to search for the highest pension annuity, adding all the features necessary such as escalation, frequency of payment or a new survivors income. Once you have purchased an annuity it cannot be changed, so learn more about annuities, compare annuity rates and before making a decision at retirement, secure a personalised pension annuities quote offering guaranteed rates.

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  55 £3,620  
  60 £4,081  
  65 £4,786  
  70 £5,656  
  55 £3,320  
  60 £3,783  
  65 £4,382  
  70 £5,102  
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