What is an actuarial valuation
Who can benefit from a pensions Actuarial Report?
The online Actuarial Report should only be used where the pension is a Defined Benefit (final salary) scheme. It is normally cost effective where the cash equivalent transfer value (CETV) is greater than £30,000. However,t here is no reason why you should not run a valuation on pensions worth less than £30,000, other than the fact that the likely difference in values may not justify the small cost.
The Defined Benefit schemes available for the private sector are Good Private Schemes or Average Private Schemes and for the public sector are Old Public Schemes or New Public Schemes. If the pension is a money purchase scheme such as a stakeholder personal pension, the quotation from the provider will show the actual value of the pension after charges and this report cannot be used in these cases.
How much does it cost?
The online pensions Actuarial Report costs only £25 (Excl VAT) per pension scheme valued and you can pay for this by using either Visa, MasterCard or Maestro. This is the same price paid by family solicitors, IFAs and other professionals that use this service to value pensions on divorce. The report is a quick and cost effective means of determining the value of a defined benefit (final salary) pension scheme. An online Actuarial Report is intended as a tool to determine what further action should be taken, such as a more expensive Bespoke Report that could cost up to £1,000.
Can the £25 Actuarial Report be used for the uniformed services?
No, if the pension scheme member is part of the fire & rescue, police force, armed forces or prison service a Uniformed Services Report is required. Due to the special early retirement features of these schemes, it is common for the report to produce an appropriate valuation of 3 times the CETV. As there are additional calculations involved, this report costs £50 (Excl VAT) per pension scheme valued and is produced manually and signed off by and actuary. It is returned to you in two working days and includes a reconciliation to explain the major differences. You can then discuss the findings of the report with your solicitor. See an example of the uniformed services valuation .
How long does it take to produce?
From start to finish the online Actuarial Report should take only ten minutes to complete and you can print out your report after the payment process. You will need to enter 15 simple pieces of data (not including payment details). Before starting to fill in the form, please ensure you have all the necessary information. You will only be asked for payment after all report information has been validated. See a summary of the pension information .
When should I buy a report?
Before starting the form to purchase an Actuarial Report or the Uniformed Services Report you must have specific information regarding the pensionholder's defined benefit pension scheme. You can find this on the quotation supplied by the pensionholder's scheme provider that includes the cash equivalent transfer value (CETV). This quotation must be included by the pensionholder in Form E sent to the court and exchanged 35 days before the first appointment during ancillary relief proceedings.
Do I need to contact the scheme to do a valuation?
No, the information to complete the an Actuarial Report or the Uniformed Services Report is available from Form E that includes details of the quotation supplied by the pensionholder's scheme provider.
Do I need my spouse or partner's consent or authority to run a valuation of their pension?
No, their consent or authority is not necessary to run a valuation for either the Actuarial Report or the Uniformed Services Report.
What information would an actuarial report provide?
The end result is a five page report signed off by an accredited actuary that you can print out and discuss the findings of the report with your solicitor. This is the same report family solicitors, IFAs and other professionals use to value pensions on divorce. See an example of the specimen actuarial report .
The report uses an Express Pension Valuation system that works on a limited amount of data and thus cannot give
a definitive value for a pension. Included is the pension valuation for a Defined Benefit scheme, a covering letter explaining the actuarial techniques of the report and what it can be used for as well as the pension and economic data used and assumptions applied. See examples of the pension valuations .
Can I use one report for multiple pension schemes?
Yes, the online Actuarial Report allows you to enter up to four Defined Benefit (final salary) schemes in one report at a cost of £25 (Excl VAT) per pension scheme valued. At the scheme data entry stage you will be prompted to add additional pension schemes if it is applicable. At the end of the process you can print the report and it will include multiple schemes.
Can both parties use one actuarial report to value the pension assets?
Yes, if the parties are engaged in the collaborative process the Actuarial Report or Uniformed Services Report may be used as an alternative to the conventional cash equivalent transfer value (CETV). In these circumstances agreement may be reached to divide the pension assets based on the Report alone. However, if the pension value is significant enough, the parties may agree that a more detailed valuation is cost effective.
Can the Actuarial Reports be used in court?
The online £25 Actuarial Report or off-line £50 Uniformed Services Report are not designed for used in a court of law, although it is likely that a court will accept it as strong evidence that the cost of a bespoke report is justified. It uses an Express Pension Valuation system that works on a limited amount of data and thus cannot give a definitive value for a pension. The on-line or off-line pensions report is intended as a tool to determine what further action should be taken, such as a more expensive Bespoke Report that that can be used to inform the division of the pension assets and relied upon in court.
If the report shows a large gain over the CETV, what further action should be taken?
If the online Actuarial Report or Uniformed Services Report valuation shows a significant gain over the cash equivalent transfer value (CETV ), it could be to your benefit to carry out a more detailed valuation that can then be used in a court of law. If the difference is not significant you may feel that the extra cost of an expensive Bespoke Report cannot be justified in your case.
If the parties are engaged in the collaborative process the online Actuarial Report or Uniformed Services Report valuation alone may be sufficient to reach an agreement. However, if the pension value is significant enough, the parties may agree that a more detailed valuation is cost effective. Similarly, additional calculations may be required if the parties wish to achieve a specific split of assets on divorce that include the Defined Benefit (final salary ) scheme.
What is the difference between the £25 Actuarial Report and the expensive Bespoke Report?
The online Actuarial Report uses an Express Pension Valuation system that works with 15 simple pieces of data and thus cannot give a definitive value for a pension and hence cannot be relied upon in a court of law. The advantage is that the report offers a quick and cost effective means of determining the value of a defined benefit scheme. it is signed off by an accredited actuary, can be printed out as a five page report and you can discuss the findings of the report with your solicitor. Based on the difference between the CETV and the valuation it can show you if a more expensive Bespoke Report is actually necessary in your case.
The Bespoke Report considers every aspect of the defined benefit (final salary) pension scheme and is used in particular when the pension benefits are a large proportion of the assets on divorce. the scheme value is calculated by multiple benefit definitions, ill health of the pensionholder or spouse is an issue or if you require an alternative valuation basis that includes income equalisation from the pension assets. For a Bespoke Report, the adviser will take responsibility for validating pensionholder details and the scheme terms. A Bespoke Report requires the consent of the pensionholder to approach the scheme, though if necessary the court may instruct that the consent is given.Source: www.sharingpensions.co.uk