Step 4: Do You Need a Pension Report?

The main goal of a pension report is to help both parties—and the court—reach a fair division of pension assets during a divorce. Since individuals typically have a variety of pension plans, a pension report may cover several important areas, such as:

• Determining how to equalize capital value at the target retirement age(s)
• Achieving equality of income at the target retirement age(s)
• Calculating the cost of implementing a pension sharing order
• Estimating the appropriate amount to offset pension benefits against other assets, like the equity in the family home
• Assessing whether pension benefits accrued before marriage or after separation should be excluded
• Establishing the best approach to meet each party’s income needs
• Considering the impact of the Lifetime Allowance
• Identifying the earliest age at which benefits can be accessed
• Clarifying the tax-free lump sum available upon retirement
• Evaluating whether any pension arrangements offer preferential terms and conditions

Asking additional questions will increase the overall cost of the report.

The cost of a comprehensive pension report generally ranges from £1,600 to £3,000 plus VAT. It’s important to weigh the benefits of obtaining this report, given its cost.

Given the complexity of pension arrangements, it’s common for individuals to find some of the information in the report difficult to interpret. Don’t worry if you don’t understand everything right away. We have created a glossary to help with unfamiliar terminology, please contact us for more information.

Once you’ve reviewed the report, it may be necessary to discuss its findings with your solicitor, mediator, or even your former partner. If any issues arise that need clarification, you can consult the expert who prepared the report or seek additional advice from your own pension advisor (a shadow expert).

Pensions can be intricate, and not all family lawyers have in-depth knowledge of pension-related financial planning. A shadow expert can offer personalised advice that a single joint expert, who must remain neutral, cannot provide.

A shadow expert might be necessary as they can bring added value to the process. In some cases, solicitors may include in their standard terms of engagement the ability to consult a pension expert for a set number of hours if appropriate.

At MKC Professional Services, we often act as shadow experts, offering advice to assist in cases like these.

Example:

We were consulted by Mrs. W’s solicitors to review the pension details provided by her ex-husband. Upon review, we discovered a beneficial early retirement option related to a previous pension scheme that had been merged with the current one. We helped draft specific questions to present to the single joint expert, resulting in an additional £140,000 being made available to Mrs. W—a significant benefit that justified our fee.

We also helped Mrs. W and her solicitors navigate the report’s findings and facilitated the implementation of the pension sharing order. A shadow expert can also help explain the report’s findings and their implications on your specific situation.

Additionally, our financial planning team often joins these discussions to create cash flow models and assist with implementing pension sharing orders. We continue to manage your financial affairs moving forward, ensuring a smooth transition.

Once the letter of instruction has been finalised, the expert will provide an estimated timeline and cost. If all required information is readily available, a pension report can typically be completed within 3 to 8 weeks.

However, if further information is needed from the pension provider(s), delays may occur. In some cases, it can take 8 to 12 weeks (or longer) to obtain the necessary information before the report can even begin.