image

CETV Value

Under the Welfare Reform and Pensions Act 1999 (WRPA 99) the cash equivalent transfer value (CETV) is the prescribed method for the calculation of the member's pension rights on divorce. The CETV from a money purchase scheme such as a personal pension, including SERPS or S2P, or stakeholder pension is relatively easy to obtain as it will be the value of the accrued pension fund on the day of the CETV.


However, where the pension arrangement is more complex such as a defined benefit scheme (final salary pension scheme), no fund value exists for the member. Instead retirement benefits are based on an actuarial calculation including the scheme member's years of service and final salary. The CETV will make assumptions of the value of these benefits in today's terms.


If the scheme trustees assume the member will leave service at the time of divorce, or the pension scheme is currently under funded, it is likely to produce an undervalued projection for the retirement benefits.
A review of the CETV by a qualified IFA with a recognised pension qualification such as G60 Pensions or equivalent, sometime in conjunction with an actuary can normally establish if the CETV has given fair value for the pension benefits accrued. Both advisers within Personal Investment Partnership Ltd have the relevant G60 qualification.


If you would like more information or have your CETV value reviewed please contact us.