Introduction
Serving police officers, armed forces personnel, fire & rescue and prison officers who continue on service could retire early with an immediate pension. The value of this pension is significantly greater than that if they left service, as assumed by the CETV. Therefore the value for a uniformed service pension in a divorce can be significantly understated by the CETV and an appropriate valuation of 3 times the CETV value is not uncommon.
Police Force example
The following is a case study example based on the police defined benefit (final salary) pension scheme.
|
Rank: |
Constable |
|
Born: |
1970 |
|
Scheme: |
Police Pension Scheme 1987 |
|
Started service: |
1995 |
|
Date of leaving service: |
After 25 years service |
|
Valuation date: |
April 2006 |
|
Current pensionable pay: |
£30,844 |
|
£100 Uniformed Services Report: |
£191,000 |
|
Cash Equivalent Transfer Value: |
£65,000 |
|
Difference |
£126,000 |
Reconciliation of differences: |
|
CETV |
£65,000 |
|
Allowing for pay increases up to retirement increasing final pensionable pay, as opposed to statutory increases in the CETV |
£51,000 |
|
Pension payable from age 50, not from 60 |
£48,000 |
|
Using the latest mortality assumptions |
£12,000 |
|
Other differences |
£15,000 |
|
|
|