By using our website you agree to our use of cookies - read more...

Equalisation of Capital Value - Pitfalls with Personal Pensions

Equalisation of Capital Value - Pitfalls with Personal Pensions

We wish to split our pensions equally on divorce and this seems very simple on the face of it. Are we missing anything?

Client Circumstances

  • Mr and Mrs Nicholls, both aged 55
  • In the process of divorcing
  • Agreed settlement of all assets except pensions
  • Mr Nicholls, no pensions
  • Mrs Nicholls has 4 personal pensions
    1. Fund value £100,000 unit linked fund
    2. Fund value £40,000 With Profits with MVA
    3. Fund value £20,000 cash fund
    4. Fund value £40,000 With Profits with GARs
  • Initial idea, before advice, is Mrs Nicholls to retain Pension 1 and transfer 2, 3 and 4 to Mr Nicholls

Recommended Solutions

  • Mrs Nicholls retain 100% of Pensions 2 and 4
  • Mrs Nicholls retains 60% of Pension 3
  • Mr Nicholls receives Pension Sharing Order of 100% Pension 1
  • Mr Nicholls receives Pension Sharing Order of 40% Pension 3

Benefits from advice given

  • Equalises real value of pensions to both Mr and Mrs Nicholls
  • Avoids MVA penalty being applied to Pension 2 (would have been reduction of 10% to 20%)
  • Mrs Nicholls retains valuable Guaranteed Annuity rate on Pension 4 (this increases income on this plan by some 40%, effectively increasing the value of that plan by 40%.)
  • If no advice taken, the result would be Mrs Nicholls would have pension fund of £100,000 but no Guaranteed Annuity rates. GARs on Pension 4 would be lost. Mr Nicholls would have pension fund of approximately £92,000 after MVA applied.
  • Both would have lower pension incomes
  • Advice is obtained from a Resolution accredited specialist adviser
  • State pension “substitution” is undertaken via Scrutton Bland

Talk to us now!

Call us on either - Colchester: 01206 838400 / Ipswich: 01473 259201 or

Future Servicing

We will look to carry out a regular review of your circumstances, objectives, needs and portfolio performance to ensure all arrangements continue to be suitable and advise of any changes that may be appropriate.

This example is for illustrative purposes only, based on current legislation and tax allowances. Tax rules and regulations are subject to change.

Budget Planner

Our internal complaints handling procedures for the reasonable and prompt handling of complaints is available on request and if you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service or by contacting them on 0800 023 4567.

Alternatively, where your complaint relates to products or services purchased online, or by other electronic means such as by email, you may refer your complaint to the online dispute resolution (ODR) platform at