There are six reasons in general why we believe that the CETVs for final salary schemes are not usually appropriate values for use in divorce. Three of these reasons also apply to CEB for pensions in payment.

Download the six reasons in detail here.

It would be unusual for all six reasons to apply to one pension. Normally only between one to three reasons apply.

The most common reason is that the assumptions of future economic experience and likelihood of death are more conservative to our own. We update our assumptions monthly based on the latest market information.

Another issue with CETV and CEB assumptions is that they differ between each different pension scheme. therefore comparing CETVs and CEBs from different pensions is like comparing apples and pears. When we value pensions in a report, or project future income and lump sums, we use the same assumptions for all pensions in the report.

For active members allowing for future salary increases on accrued benefits is based on the interpretation of accured benefits being calculated on (length of period of service) x (final pensionable salary at end of service). This is the implicit assumption underlying the approach to division of pension accrual between different periods as laid down in Scottish Law.

There is another interpretation that accrued benefits in a period consist of two parts: benefits for the period calculated upon (length of period of service) x (pensionable salary at end of period), plus a second part of (pension accrued prior to the period) x (increase in salary over the period). This approach emphasises the loyalty bonus effect of long-service in a final-salary pension scheme. We can produce figures on this basis if required.

We can if requested attempt to breakdown the differences between our valuation and a CETV or CEB valuation. This is helped where we can obtain details of the CETV or CEB basis from the scheme, though this is not always made publicly available.