Pension sharing on divorce


In divorce proceedings, dealing with pensions has become notoriously complicated. A value can be place on a Defined Benefit (DB) pension, called a Cash Equivalent Transfer Value or ‘CETV’. This is the expected cost of providing an individual’s benefits in a pension scheme and is the amount which would be transferred into another pension fund if so required.


However the CETV of a pension may not accurately reflect the value of that pension because, for example, the pension scheme may be under-funded and the CETV adjusted to allow for this. Conversely, the ‘real value’ of a final salary pension could be in excess of the CETV because a CETV will usually break any salary link inherent in the benefits promised to the individual.


It is important to not simply compare two CETVs provided for two different pensions without further information.  All schemes will calculate CETVs using different actuarial assumptions and the CETVs may be produced at different dates. In addition, public sector pensions can have CETVs which are considerably lower than the equivalent value that would be placed on pension benefits of the same size in a private sector pension scheme.


With the average size of a DB pension CETV now comparable to that of the average UK house price (Source: Royal London Survey June 2017), it is advisable to obtain specialist advice. Xafinity offer a unique approach to addressing the issues involved in these cases.  We are able to manage the whole process, understanding the legal and actuarial aspects of a complex set of issues.



Caroline Cavanagh - Xafinity

Caroline Cavanagh BL


Pauline McConville - Xafinity

Pauline McConville FFA