DB Pensions- Fair Value Calculator
About
This calculator is designed to help you estimate the value of a client’s defined benefit pension.
This calculator works by calculating the approximate defined contribution fund equivalent value, i.e., how much might the client need to have in a defined contribution pension to pay the same level of income.
These calculations are not guaranteed.
We have taken reasonable endeavours to ensure the accuracy of this calculator, however, you accept full responsibility for any reliance placed on the outputs.
This calculator is provided in the interests of being helpful only. We accept no liability for any decisions made based on the output of this calculator, nor for any financial loss resulting from reliance on its estimates.
We strongly recommend discussing your case with a suitably experienced financial professional (PODE, Actuary, or IFA) if you are in any doubt as to whether this calculator is suitable in your case.
This calculator does not constitute legal, financial, or actuarial advice. Users should seek independent professional advice tailored to their specific circumstances.
This is designed for UK cases only.
At the time of writing, the earliest age an individual can access their pension is 55 (except in rare circumstances). This is increasing to 57 from 6th April 2028 and may change in the future.
Please remember that pension values are constantly changing and that pension sharing is a best endeavours exercise. The actual results of a PSO cannot be guaranteed in advance because underlying fund values will have changed by the time any PSO is implemented.
Annuity Rates
An annuity involves transferring your pension fund to an insurance company in exchange for a guaranteed income.
There are different types of annuities available to consider, but for divorce purposes we generally focus on lifetime annuities written on a single life basis and with some level of escalation in payment to counter inflation.
The reason we use lifetime annuities within fair value calculations is to match the risk associated with the defined benefit pension in question - the defined benefit pension will pay the agreed income for as long as the pension member is alive, and this guarantee can only be matched with a defined contribution pension using an annuity.
If you are working with a financial adviser, they will be able to obtain annuity quotes for you.
Alternatively, you can view current annuity rates on Hargreaves Lansdown's 'Best Annuity Rates' page, available here: https://www.hl.co.uk/retirement/annuities/best-buy-rates (this link will open in a new tab).
If sourcing rates from the Hargreaves Lansdown page, we suggest selecting the most appropriate rate in the 'Single life, 3% escalation, 5 year guarantee' row and dividing by 100.