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Pension values can be
30% higher than the CETV.
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From only £80 you can value
a defined benefit scheme.
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   Audit rating table
  Audit Rating Table
  Introduction   B (moderate) rating
  Rating table   C (negligible) rating
  A (significant) rating   D (no benefit) rating
    

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Introduction
Before requesting a pension audit report it is important to determine if your spouse's pension benefits are likely to produce a financial benefit for you in the settlement. To help you in this decision we have developed an audit rating table to allow you rate the member's pension arrangement for your circumstances to see if an audit report is required for ancillary relief proceedings.

If the rating table shows the pension as an A (significant) rating there would be an overwhelming capacity for an audit to add value. This value can then be used by your solicitor by offsetting the assets in the divorce settlement resulting in more money for you today, as well as for pension sharing. If classed as a B (moderate) rating, value can be added but not to the same extent. However, if in your case the spouses cash equivalent value is material (eg large pensions of £100,000 or more) a B (moderate) rating can produce significant added value. However, if the negative factors as shown in C (negligible) applies in your case, and you give your spouses pension a C (negligible) rating or D (no benefit) rating then a pension audit would not produce added value and the cash equivalent transfer value (CETV) should be used in these cases.

Where your case for ancillary relief is contested, you will require evidence of the value of the spouse's pension arrangement(s) if they are an A (significant) rating or B (moderate) rating to support your position, and this is the purpose of the audit report. From our experience the A (significant) rating and B (moderate) rating with a material pension fund can make a difference in the value of the pension arrangements by between £50,000 to £150,000 in many cases.


Rating table
To help you decide if a pension audit report is needed as evidence during ancillary relief, this free audit rating table can show if your spouse's pension arrangement is actually worth significantly more than the cash equivalent transfer value as stated by the pension scheme administrators.

Simply follow the circumstances that apply for you to produce a rating of A (significant) or B (moderate). There may be some factors that mean in your case it is not so clear cut, and these are listed in the C (negligible) rating section.

Audit rating table
Rating Benefit Description
A Significant
  Significant financial benefit on an absolute and relative basis. The audit has an overwhelming capacity to add value to
  the spouse's divorce settlement ..more
B Moderate
  Moderate financial benefit. The capacity of the audit to add value is dependant upon the cash equivalent value at outset
  being material in absolute terms ..more
C Negligible
  Negligible financial benefit. An increase could be attained, but it is not sufficient to justify the cost of a pension audit and the cash equivalent value should be used
  in the divorce settlement ..more
D No Benefit
  Due to the nature of the pension arrangement, there is no financial benefit in conducting a pension audit and the cash equivalent value should be used in
  the divorce settlement ..more


A (significant) rating
This is likely where the CETV is at least £30,000, in an occupational pension scheme (specifically a public service scheme, public sector scheme and final salary pension) and two or more of the following apply:

Your spouse is still employed by the employer offering the pension scheme;
   
You are more than three years younger than your spouse;
   
Your spouse is in a public service scheme (specifically the Teachers, NHS, Police, Fire Services, Civil Service and Armed Forces scheme) and has pre April 1978 pensionable service;
   
Your spouse is a "high flyer" and can expect more merit increases and promotions than the average employee;
   
Your spouse is in an occupation where early retirement, particularly through ill health, is commonplace (e.g. Fire Services);
   
Your spouse has a full National Insurance contribution record, whereas yours is incomplete or you have been paying the married women's reduced rate of National Insurance contributions. This relates to the state basic pension benefits only, although your spouse may also have additional state earnings related pension scheme (SERPS) and state second pension (S2P) benefits;
   
Your spouses pension scheme is underfunded and calculates CETVs on an artificially low basis to reflect this;
   
Your spouses pension scheme uses the Minimum Funding Requirement (MFR) formula for determining the CETV;
   
Your spouses pension scheme has a history of awarding discretionary increases to pensions in payment;
   
Your spouses pension scheme offers early retirement pensions without actuarial reduction on retirement before the normal retirement age;
   
The rate of pension build up in your spouses pension scheme steps up for total pensionable service after a certain period of pensionable service has been completed (e.g. Police officers);
   
The accrued pension in your spouses pension scheme becomes available at an earlier pension age without actuarial reduction after a certain period of pensionable service has been completed (e.g. Armed Forces).


B (moderate) rating
This is an occupational pension scheme (probably only a final salary pension) and only one of the following apply:

Your spouse is still employed by the employer offering the pension scheme;
   
You are more than three years younger than your spouse;
   
Your spouse is in a public service scheme (specifically the Teachers, NHS, Police, Fire Services, Civil Service, Armed Forces and Prison Service scheme) and has pre April 1978 pensionable service;
   
Your spouse is a "high flyer" and can expect more merit increases and promotions than the average employee;
   
Your spouse is in an occupation where early retirement, particularly through ill health, is commonplace (e.g. Fire Services);
   
Your spouse has a full National Insurance contribution record, whereas yours is incomplete or you have been paying the married women's reduced rate of National Insurance contributions. This relates to the state basic pension benefits only, although your spouse may also have additional state earnings related pension scheme (SERPS) and state second pension (S2P) benefits;
   
Your spouses pension scheme is underfunded and calculates CETVs on an artificially low basis to reflect this;
   
Your spouses pension scheme uses the Minimum Funding Requirement (MFR) formula for determining the CETV;
   
Your spouses pension scheme has a history of awarding discretionary increases to pensions in payment;
   
Your spouses pension scheme offers early retirement pensions without actuarial reduction on retirement before the normal retirement age;
   
The rate of pension build up in your spouses pension scheme steps up for total pensionable service after a certain period of pensionable service has been completed (e.g. Police officers);
   
The accrued pension in your spouses pension scheme becomes available at an earlier pension age without actuarial reduction after a certain period of pensionable service has been completed (e.g. Armed Forces).

If audit rating table shows a B (moderate) rating you can benefit financially from a pension audit report but not to the same extent as an A (significant) rating. However, if in your case the spouses cash equivalent value is material (eg large pensions of £100,000 or more) a B (moderate) rating can produce a significant pension value to use in offsetting resulting in more money for you today.


C (negligible) rating
In A and B above we described the principal factors which usually enable us to achieve a positive financial benefit. In your case, however, there are a number of factors which would have a negative influence on our valuations.

Where initially you think your spouses pension could be considered an A (significant) rating, two or more of the following could reduce this to a C (negligible) rating.

Where initially you think your spouses pension could be considered a B (moderate) rating, only one of the following could reduce this to a C (negligible) rating.

Your own pension rights are of significant value when the same valuation techniques are applied;
   
Your spouses pension scheme may have a relatively generous CETV formula;
   
Your spouses pension scheme CETV may be well under £20,000 which reduces the impact of our calculations in absolute cash terms;
   
You may be older than your spouse.


D (no benefit) rating
The CETV formula applicable to any pension occupational scheme necessarily uses a number of assumptions which are designed to be appropriate for the membership as a whole.

This makes the CETV formula a blunt instrument and means that, for some members, the CETV formula produces a value which is greater than the value of that members benefits. In these situations you are actually better off to use the CETV for negotiation purposes and a pension audit would be counter productive.

Where the pension arrangement is a money purchase scheme the CETV should automatically be used because contributions are to a personal unitised plan. This means the number and value of these units determine the total value of the plan.

The type of money purchase arrangements are stakeholder pensions, personal pensions, retirement annuity policies (RAPs), section 32 policies, additional voluntary contributions (AVC) executive pension plan (EPP), and free standing additional voluntary contributions (FSAVC).

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