Pick your expert carefully

Often when a couple are getting divorced and there are pension assets to share, the solicitors will suggest they appoint a ‘single joint expert’.

The responsibility of this individual, usually an independent financial adviser, is to work out a suitable financial settlement examining the sometimes complex subject of how pension benefits might be shared.

Solicitors acting for the two parties will often invite an expert to analyse the pension benefits held by the couple and work out how these funds should be shared to provide equality of income at retirement.

Calculating this equality of income at retirement requires a certain level of expertise and experience.

I recently started working with a lady who is getting divorced to construct a comprehensive Financial Plan for her future.

Part of this Financial Planning exercise is to provide advice on how to deal with the marital pension assets of just over £400,000.

Prior to our involvement with the client, her solicitor and the solicitor for the other side appointed a single joint expert who produced a report to calculate a suitable share of the pension assets to achieve equality of income in retirement.

So far, so good.

However, one of the assumptions this ‘expert’ used in his report was that my client is a smoker. She is not.

This means that a more generous smoker’s annuity rate was used in the assumptions for the calculating equality of income.

Consequently, a smaller share of pension assets have been awarded to my client than they might have been if the correct information and assumptions were used.

On pointing this out to her solicitor and the expert used to prepare the report, he responded to say she was better off being shown as a smoker since she got a higher annuity rate!

This lack of expert knowledge is quite worrying and we are now working with the client, and her solicitor (and the Court, if necessary) to get things rectified so she can receive a larger share of the pension assets which more accurately reflect her non-smoker status.

If you are getting divorced and need financial advice, pick your expert carefully.

Look for an adviser who is well qualified (to at least Chartered Financial Planner level) and who has specific experience in the area of pensions and divorce.

You don’t have to accept the first financial adviser your solicitor or the other side suggests, and it can often pay to challenge their recommendation.

It also never hurts to seek a second opinion; in this case the second opinion from an experienced Financial Planner could save an estimated £5,000-10,000 in lost pension assets.

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