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JGM
JGM, Solicitor
Category: Scots Law
Satisfied Customers: 10655
Experience:  30 years as a practising solicitor.
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I am divorcing in Scotland, my occupational pension scheme

Resolved Question:

I am divorcing in Scotland, my occupational pension scheme is in payment, given the undernoted dates what is the divorcing wife's percentage entitlement of the Cash Equivalent Figure just obtained from my pension administrator.
Date I joined occupational pension scheme - 12/08/1968
Date of Marriage - 23/05/1997
Date Pension went into payment to me - 31/03/2007
Date of agreed separation - 16/05/2016
Date of Current Cash Equivalent Figure - 16/05/2016
Submitted: 7 months ago.
Category: Scots Law
Expert:  JGM replied 7 months ago.

The relevant date is the separation date. The formula is A x B divided by C where A is the value of the Cash Equivalent Benefits value of the rights or interests in any benefits under the pension arrangement which is calculated, as at the relevant date, B is the period of C which falls within the period of the marriage of the parties before the relevant date and
C is the period of the membership of that party in the pension arrangement before the relevant date. So in your case the amount would be your £CEB x number of days between 23/5/97 to 16/05/16 divided by number of days between 12/8/68 to 16/5/16.

Expert:  JGM replied 7 months ago.

You calculate the actual figure by taking the CEBV and multiplying it by the total number of days you were a member of the scheme during the marriage. In this case that will be the number of days from the date of marriage to the date of separation. Then you divide that figure by the total number of days you were in the pension scheme. That will be the day you joined until the date of your separation. You can get online the The Divorce etc. (Pensions) (Scotland) Regulations

2000 which prescribes the statutory formula for the calculation.

I hope that helps. Please leave a positive rating so that I am credited for my time.

Customer: replied 7 months ago.
Just to clarify, the CETV was £871,535 just taking 19 years from 1997 to 2016 and 48 years from 1968 to 2016 , the calculation would be £871,535 X 6935 days divide by 17,520 days = £344,982. She would be due 50% of that ie £172,491 ?
Customer: replied 7 months ago.
Just to follow up on that, I thought the divorcing wife only shared in the benefits built up in the pension scheme whilst contributions were being made into it ie it went into payment in 2006, does that have no relevance ?
Customer: replied 7 months ago.
When I asked much the same question in 2012 ( ref JGM) the answer was " When a pension is in payment the starting point is the valuation of the Cash Equivalent Benefits rather than the Cash Equivalent Transfer Value. The CEB is then apportioned according to the number of years contributions to the pension fund were made during the marriage. Once the CEB has been established you divide the value by the number of years contributions were paid into the fund and multiply that figure by the number of years during the marriage contributions were made. That figure is considered a matrimonial asset" Why the difference ?
Expert:  JGM replied 7 months ago.

Do you have a CETV value or a CEBV? Assuming a CEBV the answer is the same although worded differently.

Customer: replied 7 months ago.
I have a " Current Cash Equivalent" the narrative below that says "The current cash equivalent of the above members accrued entitlement is the amount available for transfer to another approved pension arrangement as at the effective date shown above ( 16/5/2016) " They also say " Please note that the figure provided is the total Cash Equivalent Transfer Value of your benefits in the above scheme"
Customer: replied 7 months ago.
Sorry about this but your two answers ( 2012 and now) are completely different as far as I can see. The 2012 answer would result in a matrimonial asset figure of £223,470 ( £871535 divide by 39 ( number of years contributions made into scheme) multiply by 10 ( number of years during marriage that contributions were made ).In your most recent answer the matrimonial asset figure is £344,982 ( as my earlier calculation). Am I wrong ?
Expert:  JGM replied 7 months ago.

They will be different. You can't compare the two if the separation date is 4 years later and the CEBV changes accordingly.

Expert:  JGM replied 7 months ago.

Also remember that if the pension is in payment a CETV is not appropriate and a CEBV shouod be sought.

Customer: replied 7 months ago.
Sorry about this but I understand the figures will be different four years apart but it's not the figures I am speaking about it's the method of calculation. The answer given by you in 2012 is simply the method of calculation, there were no figures quoted. I have used both methods this time as I have a figure and the answers are wildly different, this is what I want explained.As far as I can see the big difference is in 2012 "you take the CEB value and divide it by number of years contributions are paid into fund and multiply that figure by number of years during the marriage contributions were made"Your reply now is a different calculation, ignore the value of the CEB or the fact it is 4 years later. You are calculating to date of separation as opposed to date contributions ceased being paid into the scheme, surely you can see that
Expert:  JGM replied 7 months ago.

Yes I can see the difference. Have you done your calculation using the formula in regulation 4? You will see the definition of C containing the words "period of membership". I think the definition of period of membership is where the issue arises. I'll do a bit of research on this and come back to you.

Customer: replied 7 months ago.
Thanks much appreciated, also just to let you know my pension provider has said the CETV is the only valuation they will provide and that should be sufficient, seems very strange to me !!
Expert:  JGM replied 7 months ago.

I havent forgotten about you. I'm not at home or at work just now and I don't have access to Westlaw. As soon as I am back I'll do some research. However, in relation to your latest post, the CETV isnt appropriate as you know where the pension is in payment. It should be a Benefits Equivalant Value also known as a Pensioner Equivalent Transfer Value or PETV and you may want to take this up with them.

Customer: replied 7 months ago.
Thanks for that no problem. I have taken the issue of why they have not given me a Benefits Equivalent Value up with them. A telephone call was hopeless, person had no real idea I don't think so I have put it in writing. Await the results of your research
Customer: replied 7 months ago.
Hi, any update on this yet ?
Expert:  JGM replied 7 months ago.

Sorry for the delay. I'm just back today and have looked at this for you. I found the case I was aware of and I'm glad I looked at it again. This was a divorce called McDonald v McDonald in 2015. My recollection was that it had changed the position I wrote of in 2010 to include the period that a pension was in payment as part of the calculation period. However, what actually happened was that two judges to one ruled in favour of the proposition that membership of a pension scheme meant the period of active membership and not the following period of pensioner membership. Lady Smith delivered the first judgment which was in fact the dissenting judgment. The other two judges were in the majority and so affirmed the law on this subject. So in summary the law still is as you would wish it to be. You can see the judgment here: http://www.scotcourts.gov.uk/search-judgments/judgment?id=2e68e6a6-8980-69d2-b500-ff0000d74aa7. I have also checked Westlaw and there does not appear to have been anything to overrule this case and indeed this is the latest case in date dealing with the pension regulations apportionment provisions. I hope that clarifies the position. Please leave a positive rating so that I am credited for my time.

Customer: replied 7 months ago.
Thanks for that, just as well I actually queried your first answer or would have been badly advised. Ok I will leave a positive rating if you answer the question, would the period of active membership of a pension scheme be any different to your above answer if the person left their employment and the pension was deferred but not in payment, my wife's pension was deferred in 2004. Would the calculation be to date of deferment or date of separation.?
Expert:  JGM replied 7 months ago.

Based on the McDonald case the date of deferment would be logical as that would indicate a cessation of membership of th scheme but there is no reported case on that specific point.

JGM, Solicitor
Category: Scots Law
Satisfied Customers: 10655
Experience: 30 years as a practising solicitor.
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