Pensions Reports

The purpose of a report is to assist the parties, and the court, to consider how to fairly divide the pension assets.

As the parties are likely to have a mixture of different pension arrangements the report may need to consider many issues including: –

• how to achieve equality of capital value at the specified retirement age(s)
• how to achieve equality of income at the specified retirement age(s)
• the cost of implementing a pension sharing order
• an appropriate amount to offset the pension benefits either in full or in part
• whether benefits accrued before marriage / cohabitation or after separation should be excluded
• how to achieve a specific income to meet the parties needs
• the effect of the Lifetime Allowance
• identify the earliest that benefits are available
• identify the tax-free cash sum available at retirementwhether any
• if any of the pension arrangements contain preferential terms and conditions

Obviously the more questions that are asked of the expert then this will increase the fee payable

Unfortunately, pensions can be a very complex area of financial planning and we cannot expect family lawyers to also be pensions experts – although some are!

Because a single joint expert must maintain a neutral stance they cannot advise either party on specific issues that may affect them personally.

Therefore, a shadow expert may be required to assist, but this would only be in circumstances where additional value can be added.

Some solicitors include within their standard engagement terms that they can incur up to 2 hours of chargeable time as a disbursement to seek initial guidance from a pensions expert, if appropriate.

Example

Mrs W solicitors asked us to look at the pensions information provided by her ex-husband. We identified he had a beneficial early retirement option available due to his being a member of an earlier pension scheme that was amalgamated into the current arrangements. We helped create a specific question to be put in the letter of instruction to the single joint expert which resulted in the pensions report indicating an additional £140,000 should be made available to Mrs W – well worth our fee!

On this occasion, we also helped Mrs W and her solicitors go through the output of the report and help coordinate the implementation of the resulting pension sharing order.

A shadow expert can also sometimes be of assistance once the pension report has been prepared to help explain the issues being considered, and the impact on you.

When acting as a shadow expert we are often joined by a financial planning team to consider a cash flow model, where appropriate, and to assist with the implementation of any pension sharing orders. The financial planning team will then look after your financial affairs in the future, if you wish ensuring a smooth transition.

Most pensions reports are prepared on a ‘single joint expert’ basis, which means that they are impartial to the parties appointing the expert, and the expert’s duty is to the Court.

These reports are prepared in accordance with protocols set out in the Family Procedure Rules.

A letter of instruction is usually prepared setting out the issues to be addressed by the expert.

Depending on the expert appointed, a letter of instruction may have to be prepared by an experienced family lawyer to ensure the relevant points are addressed – CW Pension Consultants Ltd normally require a written instruction.

In some cases, a pensions report may be prepared specifically for a single party

Once a letter of instruction has been agreed the expert will be asked to provide a timescale for the preparation of report and the estimated cost.

If all the information is available, then a report can usually be prepared within 3 to 8 weeks.

However unfortunately if more information has to be obtained about the parties respective pension arrangement(s) then that can cause significant delays, as it is not uncommon for it to take 8 to 12 weeks (and sometimes longer) for replies to be obtained, before the report can even be started.

The preparation of a full pensions report is likely to be in the range £1,200 – £3,000 plus VAT depending on the pension arrangements involved and the questions asked and so it is important to understand the benefits that it will bring.

Unfortunately, due to the complexity of pensions, it is not unusual for parties to have some difficulty in understanding the outcomes of the report – so please don’t feel that you should understand everything.

We have produced a glossary of terms which hopefully will help with any terminology.

Once you have had a chance to read the report you may need to discuss it with your solicitor, mediator former spouse or your shadow expert, if appropriate.

The report may raise issues that require further clarification, either from the expert who prepared the report or from your own appointed advisor

This is discussed in the next section Reaching an outcome