Divorce and pension sharing outcomes – How UK Law teams can improve their processes and client outcomes
Family Law teams – is your planning process costing your clients thousands of pounds in retirement?
Xafinity D.B. transfer value index since 2016
Obtaining timely valuations on a client and their spouses final salary (Defined Benefit) scheme, is key to a good pension sharing outcome especially if the market valuation is about to fall, writes Mark Jones – Director of retirement services at Assured Wealth.
“We are often approached to act for legal teams on behalf of their clients, with Defined Benefit (DB) valuations that are almost a year old. Whilst we appreciate the difficulty, cost and delay this may cause to the case being heard in court in a timely manner, in the future the valuations of these plans values may be vastly different from 12 months ago.
Let’s take into consideration the economic climate around DB valuations and the effect on transfer values.
“We have seen some volatility in transfer values, with changes in gilt yields being the main driver, a result of a number of issues such as the uncertainty caused by the general election, the first rise in the Bank of England official bank rate for over 10 years and commencement of Brexit negotiations.”
Whilst defined benefit (DB) transfer values remained high during 2017, but in line with the figures of the previous year, the numbers fluctuated through the year, but the typical transfer value stood at £236,000 at the end of December 2017, little changed from the figure of £234,000 at the end of 2016. Transfer values have remained at or around historic highs during last year.
So how can your advice and planning process be more effective and potentially obtain greater returns for your clients?
A good pensions data collection process would look like this:
Complete a workplace record for each party to ascertain if pension benefits have been missed. Whilst each party have to meet the full and frank rules, people do forget they had pensions with a previous employer. To go even further, they could contact the pensions tracing service to make sure that nothing has been missed. These old plans can be really valuable to the calculation of assets.
Write to each provider of defined contribution pension schemes first, to get up to date valuations and also confirm that these plans contain NO guaranteed benefits for the member. (These guarantees can have a great impact for the members income if they have a guaranteed maturity value or guaranteed income in retirement).
Write to all D.B. providers after two weeks of the DC request and request a full CET and benefits pack, along with a copy of the scheme rules, for each element of the pension scheme. (DB schemes change rules on a regular basis and new parts of the schemes have different computation factors to consider along with differing selected retirement ages).
Do any of the clients have a life limiting illness? This will have a great impact on what benefits can be drawn and the tax implications on each party.
Pensions in payment. When were these taken and how are they now being drawn? Ask each of the providers to give full details on when and how benefits were crystalised and any subsequent tax-free cash entitlement they may still have.
Having all of the data available to the technical team helps reduce delays and offers the most accurate calculation possible. This allows you to plan effectively knowing court dates will not have to delayed.
Submit all of your data along with an instruction to Assured Wealth and we will turn around your pension sharing report in less than three weeks, from the receipt of your information.
Our fee for our service is just £695 plus VAT. This is payable between both parties in a joint instruction case. Full details on our service can be found here.
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