Market Value Adjustment

A client who is going through a relatively amicable divorce is having a problem finalising it with the lawyers.

The problem seems to be the division of his pension fund (personal, not company, I think). He is prepared to split it 50:50, (with both funds remaining with the original insurance company) but the insurance company wants to charge an MVA on this "transfer". Both spouses accept that the MVA can apply if there was a transfer to a different insurance company, by either of them.

I have not seen the original documentation, but I cannot see how the insurance company can justify an MVA in these circumstances. There is no loss to the other policyholders, no change of investments etc.

Has anyone come across this before?

Well, when I hit 65 last month I applied to take an additional pension from an AVC taken out during my last employment, and was told there would be a 20% (approx) reduction in market value due to market conditions.

I thought that such reductions only applied when cashing in schemes before maturity, but it appears not. It seems to me that Insurance companies feel they can do what they like under the guise of an MVA/MVR without needing to justify it in any way.

When I complained and asked them to provide justification for the reduction they just said that this was "company confidential". I still can't understand that they can take a significant part of my fund without needing to provide any justification for it.

"Extremely Disgruntled and Totally Pissed Off" of Lancashire.