AVC PRSA - Divorce Scenario

What is clear is that there are loads of gaps in relation to our combined knowledge of PAOs.
...but assembling the "wisdom of crowds" adds value.

What's clear is that the liability of the scheme changes following a PAO
Not necessarily. As @NoRegretsCoyote has explained, the liability is still based on the member's age, salary and service. The PAO simply reallocates this liability. The other spouse doesn't get a separate pension, but rather a share of the member's pension, paid directly to her/him rather than the member. When the member dies, the surviving spouse gets the survivor's pension. (Or shares it with the new spouse, if the PAO so specifies.

What's clear is that this liability could increase following a PAO
It is indeed possible (and likely!) that the survivor's element of the pension liability could change following a change of spouse to a younger model. However, that can happen anyway following death of a spouse, or depending on the rules of the scheme, on the nomination of the beneficiary by the member. It doesn't necessarily need a PAO to give it effect. This is a normal hazard for pension trustees and is small in the overall scheme of things.

What's clear is that your principle is flawed

I'm honestly struggling to understand what part of the above you are struggling with but I'll leave you at it!
Telling people who are trying to answer your question that they're "struggling with" stuff isn't really very nice. You might like to reconsider!
 
Good post, Right Winger

Not necessarily. As @NoRegretsCoyote has explained, the liability is still based on the member's age, salary and service. The PAO simply reallocates this liability. The other spouse doesn't get a separate pension, but rather a share of the member's pension, paid directly to her/him rather than the member. When the member dies, the surviving spouse gets the survivor's pension. (Or shares it with the new spouse, if the PAO so specifies.
versus earlier
2. As the benefits allocated to the spouse are a subset of the benefits payable to the pension holder, they become payable at exactly the same time as the holder's benefit.
If the same amount is payable from the same date to a person of a different age, can you explain how that does "not necessarily" change the liability please?

However, this can happen anyway.......
Totally agree.

Telling people who are trying to answer your question that they're "struggling with" stuff isn't really very nice. You might like to reconsider!
Not sure if I totally agree here - I was reacting to "I've no idea what point you're trying to make". I would respectfully suggest the point I was trying to make wasn't that obscure!
 
Good post, Right Winger
Thank you!

If the same amount is payable from the same date to a person of a different age, can you explain how that does "not necessarily" change the liability please?
Because the end date is the member's death, not the spouse's death. (Survivor's pension, as I said, is obviously different.) So same total amount, same start date, same end date = same liability.

Not sure if I totally agree here - I was reacting to "I've no idea what point you're trying to make". I would respectfully suggest the point I was trying to make wasn't that obscure!
Let's agree to differ!
 
What is clear is that there are loads of gaps in relation to our combined knowledge of PAOs.

What's clear is that the liability of the scheme changes following a PAO

What's clear is that this liability could increase following a PAO

What's clear is that your principle is flawed

I'm honestly struggling to understand what part of the above you are struggling with but I'll leave you at it!
None of that is clear. You don’t seem to be able to understand the simple logic at play here.

Scenario 1)

A & B are married. A is entitled to €C at retirement age and until death. If A predeceases B, B gets 50% of €C until death.

The numbers don’t matter, I just chose €50k and €25k for simplicity.

Scenario 2)

A & B are divorced. A was entitled to €C at retirement and until death. But now, at retirement age, A gets 80% of €C and B gets 20% of €C until death.

Scenario 1 is a ‘win’ for the Trustees/Pension Scheme. Paying 80% plus 20% until the respective recipients die is better than paying 100% and then 50%.

A dies first, you’re better off.

B dies first, you’re better off.
 
Because the end date is the member's death, not the spouse's death. (Survivor's pension, as I said, is obviously different.) So same total amount, same start date, same end date = same liability.
Ah - I see, I see now. Thank you. I've decided to read up on this stuff. Well, I never......

Mind you, a divorced friend of mine (who is drawing part of her ex's pension under a PAO) says sometimes "if he dropped dead in the morning, I couldn't give a blah, blah, blah"......from my new found learning, the extent that this is true might depend on what type of designated benefit was put in place?!

You don’t seem to be able to understand the simple logic at play here.
I agree to agree to differ, Right Winger, but have you no sympathy for my position at all at all?
 
Scenario 2)

A & B are divorced. A was entitled to €C at retirement and until death. But now, at retirement age, A gets 80% of €C and B gets 20% of €C until death.

Scenario 1 is a ‘win’ for the Trustees/Pension Scheme. Paying 80% plus 20% until the respective recipients die is better than paying 100% and then 50%.

A dies first, you’re better off.

B dies first, you’re better off.

I don't think survivors' benefits evaporate in divorce though - aren't they allocated as part of a settlement? So a PAO that says B gets €C until A dies and then €C/2 afterwards for the remainder of B's lifetime?

I am far from an expert here but divorce shouldn't be a reason for the NPV of a pension asset to be either reduced of increased.
 
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