Actuarial Expert opinion - pension savings/business valuation

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Property and pension contributions that have been accumulated at pension funds and insurance companies, during the time they lived together, are those assets that need to be divided between a married couple or common-law partner.
Those assets need to be equally divided as a result of a divorce or separation.
An examination of the pension savings components (annuity, capital, compensation) of the spouses is required, taking into account different details such as a method of realization, the date of realization, taxation, as well as a reference to the method according to which the balance will be carried out.

Banks/investment portfolio:

In order to give a full disclosure of the financial state of the couple, bank accounts and investment portfolio values, need to be equally divided, also, tax payments need to be taken into consideration.

Private company/business:
As well as pension saving, also private business of a couple, or one of the spouses need to be taken into account while balancing all the assets that a couple possesses.
In this case, a valuation of the business is needed.
 

There are two methods for dividing pension savings in a divorce proceeding:

 

1. Pension capitalization (lump sum)
   This method is the simpler one because it allows all the pension savings to be left unchanged/redeemed, 
   so an actuarial examination includes one final figure that brings a balance between the couple's savings.
   Hence this method eventually makes it possible to balance the couple's pension savings through one amount that will go from one to the other, this way allows for immediate balance.
    

2. Pension Savings Distribution Law (since 2014)

The law is intended to divide all or part of the pension accounts of spouses when at the end of the actuarial consultation process, the actuary's opinion must be approved by the court and forwarded to the pension bodies for the implementation of the recommendations of the parts of the accounts.

There are several disadvantages to this method:

• Operational risks may rise as a result of the institutional bodies that need to perform changes and transfer the savings from one policy to another.

• The spouses are bound to each other throughout their lives since taxation is conditional on the accumulation of each spouse.

• In every fund that has a compensation component with an active employer, a warning note will be required since the funds do not yet fully belong to the employee.

• In light of the above, this type of fund makes it almost impossible to move/negotiate management fees.

• The law does not deal with the distribution of 'histaglut' funds.

• If the scope of the distribution is over NIS 1.6 million, an immediate tax payment of 20% is required (which creates double future taxation and an immediate loss, over the value of NIS 1.6 million).

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Important recommendations for those who face the issues of balancing pension savings in the divorce process:

• Make the most of your mediation process in an optimal way, so you can save lots of headaches and money and sometimes you won't even have to contact an actuary.

• If you do contact an actuary, make sure that he/she is on the list of actuarial consultants of the Israeli Association of Actuaries.

• It is very important for the spouses to agree on the identity of the actuary who will perform the work for both spouses in order to work in mutual cooperation with the actuary to reach a practical solution.
   

Consultation meeting / second opinion for actuary work

There are situations where couples want to get another opinion in order to understand the output they received.
Firstly, it is always recommended to get explanations from the professional who prepared the opinion, and resolve issues that are unclear.
In case you are interested in a second opinion, we will be happy to assist in explaining and simplifying complex issues and making them accessible and clear.