Independent Valuation

One of the reasons for considering an independent valuation of a pension scheme member's rights is that the cash equivalent transfer value (CETV) initially quoted by the pension scheme is not an adequate indicator of its value. Courts have regard to the proper value and benefits under a pension which a spouse “…has or is likely to have…” in the future. The Courts also require to know the effect of such benefits on both the husband and wife, information which is not provided within the CETV.

Differences can arise between the figures produced by an independent valuation and the CETV. Such differences arise primarily because of the different actuarial assumptions adopted.

The pension scheme CETV will assume that the scheme member leaves pension service at the time of the CETV calculation. Therefore, this reflects that the pension scheme member's rights will not become payable until the normal retirement age for a departed/deferred member is attained.

Conversely, an independent valuation assumes that the member continues in service and such a valuation considers the likelihood of the member retiring at the earliest age that full benefits will become payable as governed by scheme rules.

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