Your Spouse

Your spouse may try to undervalue their pension and it is up to you and your lawyer to check this. They may provide a letter from their employer that purports to value their pension. Do not accept this. The value shown is probably too low.

They may provide you with a valuation report that is biased or that is based on estimates. For a small fee, your lawyer can have this report checked by an expert pension valuator to ensure that the values are not understated.

Your spouse may suggest that you each keep your own pension, and thereby you can both save the cost of having your pensions valued. There has been more than one case where this approach cost one of the parties over $100,000 because the values of the pensions were not included in the equalization of assets.

Your spouse may suggest that even though you lived together before the marriage, only the marriage period should be considered in the pension valuation. Your lawyer will be able to provide Court cases to refute this suggestion.

One of the things that could affect the value of a pension substantially is the age of retirement that is assumed in the calculations. Generally speaking, the earlier the age of retirement that is assumed, the more pension the person will receive; therefore, the higher the value will be. You should provide your lawyer with every piece of evidence you have to show that your spouse will probably retire as early as possible. The following are some of the things to consider in this respect:

Many Court cases have established that it should be assumed that the pension member would retire at the earliest age at which they can receive an unreduced pension. Find out if your spouse’s pension plan has a provision for an unreduced pension on retirement before age 65.

If your spouse has always said or shown in other ways that it was their intention to retire as early as possible, let your lawyer know about this.
The earlier that the pension payments start, the more your spouse will collect from the pension. Therefore, it may be that your spouse is inclined to retire early in order to collect the highest total amount possible and get the most from the pension.
The early retirement provisions of a pension plan are available whether your spouse takes advantage of them or not. It would not be fair for you to lose out just because your spouse decides not to retire early.
If your spouse’s pension is generous and fully indexed, your spouse will not suffer a drastic reduction in income on retirement. Therefore they will be more inclined to retire early. Find out about the indexing provided in your spouse’s pension plan.
A high percentage of people do retire early.
If your spouse has health problems or hates work, they would be more likely to retire early.
If your spouse has a hobby to pursue or other interests, they may be more inclined to retire early.
If your spouse can retire from their current job at a young enough age to get another job or start a business, your spouse may be more inclined to retire early.
The older your spouse is on separation and the closer they are to qualifying for early retirement, the more likely your spouse will be to take early retirement.
You should normally assume the earliest date of unreduced pension in valuing your spouse’s pension, and it should be up to them to prove that they will not be able to retire early.

Pay careful consideration to the income tax allowance that has been deducted from the value of your spouse’s pension. Some valuators arbitrarily allow a flat rate of 20% or 25%. Having the pension valuator do proper calculations may prove a much lower tax rate and therefore, a higher value for your spouse’s pension.

Some pensions are indexed to keep pace with inflation and some are not. An indexed pension is worth more than one that is not indexed. You should find out whether or not your spouse’s pension is indexed and ensure that any indexing is considered in the valuations.