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Clare
Clare, Family Solicitor
Category: Family Law
Satisfied Customers: 34105
Experience:  I have been a solicitor in High Street Practise since 1985 and have specialised in Family Law for the last 10 years
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I am a Canadian citizen, but am paid in the US and am part

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I am a Canadian citizen, but am paid in the US and am part of a US partnership. I have retirement vehicles. 1) a 401k; so a contribution plan and 2) a defined benefit plan that my firm has setup. I am getting divorced here in the UK as both my wife and I live here permanently.
The starting point for asset split is 50:50 and I've accommodated for that that in my offer. I am confused about what to do about my pension and the 401k however. I can't split them in the US as I can't get a QDRO. I've consulted with 2 experts on QDRO's and since I have no property or ties to any jurisdiction there I can't get a QDRO order. My firm that I am a partner in will not split the largest chunk of my defined benefit plan anyway. They say specifically "Regarding the Top-Hat Plan (the name of our plan), you have a Deferred Vested Benefit. The Firm will not pay any portion of the Firm funded Top-Hat benefit to a third party including a former spouse"
I am at a loss of what to do. She is entitled to half of the pension at it's current value I believe but I have no way to get that to her.
Submitted: 2 years ago.
Category: Family Law
Expert:  Clare replied 2 years ago.
Hi
Thank you for your question.
My name is Clare
I will do my best to help you but I need some further information first.
Are there any other assets here in the UK that you can give her a larger share of in lieu of the pension?
Clare
Customer: replied 2 years ago.

Yes, I have two homes. However that would consume a considerable amount of the equity to provide an asset that while valuable in the future is not of any help to me now (the pension I mean). If I have to do this using an offset would I have to provide for the full amount. So lets say the pension would provide £48,000 per year from the time I reached 58, that would mean it's current value using interest rates and mortality tables might be £600,000 ( the amount required now to fund £48,000 per year at that rate ) Would I owe her £600,000 from my equity. Honestly that doesn't seem fair to me as that gives her everything now while I would struggle to pay for anything.

Expert:  Clare replied 2 years ago.
Hi
What are the current Cash Equivalent Transfer values of the pensions?
Clare
Customer: replied 2 years ago.

I don't know. It's a UK notion and I can't get exactly what a CETV is from the pension provider in the US but...

1) The 401k which is not really a pension but is only removable at age 59 (I'm 49, and my wife is 42) is $250,000 US dollars. So half of that is $125k. What is the CETV of that. I guess it's $250,000 since is is cash, but yet I can't take it out without penalty so it is not worth $250k in reality right now.

2) My pension is three components a) an HR-10 which is worth $187k right now b) a guaranteed benefit portion which is worth just $28k and c) the part the firm wouldn't split even if I had a QDRO because it's a deferred $344k

Expert:  Clare replied 2 years ago.
Hi
Could you explain a little more about the third part of the second pension please?
Clare
Customer: replied 2 years ago.

It's a deferred benefit plan. Here is what it says "You have earned a Deferred Vested Benefit of $91,958 per year payable at age 58, which is comprised of the Firm -paid portion plus the funding sources in the section below. The settlement of the Firm-paid portion is payable upon withdrawal from the Firm.





Present Value of the Firm-paid portion is $344,775"

So she would be entitled to half of $344,775 as far as I can tell.

"plus the funding sources in the section below" means the HR-10 I've already mentioned + the guaranteed amount that I've also already mentioned.

Here is the exact quote from my pension summary...

"Funding Sources





Defined Benefit Plan - Annual amount payable at age 58, based on service to 6/30/2014

HR-10 Plan $187,819, Estimated Firm Account (p) $28,020"









Expert:  Clare replied 2 years ago.
Hi
How long have these pensions been running - and how long have you been married?
How many years were you both married and paying into the pensions
Clare
Customer: replied 2 years ago.

16 years for both. Length of the marriage, length of the pensions.

Expert:  Clare replied 2 years ago.
Hi
Thank you
The CETV of the Pensions is therefore approximately $810,000 or roughly £505,625.A half share would be £252,812,50
However as you so rightly say this is not the same as cash so it needs to be discounted - that can be something of a guessing game - so I would offer between £85,000 and £127,000 extra equity
Alternatively you can pay a Pensions Actuary to do a full analysis and give you a figure
I hope this is of assistance - please ask if you need further details
Clare
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