We use a computer program to calculate our pension shares. Due to the number of different types of schemes, variations in scheme rules, sources of data and different possible objectives from a pension share this program is extremely complicated.

It is therefore not possible to provide for any specific case, except at disproportionate cost, the derivation of any pension share result.

However the principles are relatively simple. We project forward year-by-year relevant values, such as the chance of each party being alive, the current value of money in each year, the salaries of active members and the deferred benefits of leavers, any tax-free lump sums and the amount of any pension income. We then multiply together factors for each year and total them as required. We determine which pensions we think most efficient to share, and calculate the effect of a pension share by reproducing how a share would be implemented in practive. To meet specific objectives we iterate on the percentage pension share,and we try different combinations of pensions to share so as to test which is the most efficient result. We then extract the numbers into our reports. It is an approach commonly adopted by actuaries for all sorts of financial projections.

If you are not an actuary then an example might help, so please download this example.