What is a Cash Equivalent Value (CEV) and Why Does it Matter?

When you’re unpicking the finances of a divorce, pensions can be one of the hardest things to understand — and one of the most valuable. So how do you work out what a pension is actually worth?

That’s where the Cash Equivalent Value (CEV) comes in.

In Simple Terms: What’s a CEV?

The CEV is the amount your pension provider says your pension is worth today - if you were to move it somewhere else.

It’s not the monthly income you’ll receive in the future. It’s a lump sum value. A present day estimate of the capital value needed to provide future benefits.

This number is often used to help divide pensions fairly during a divorce. Whether you’re:

• Splitting the pension directly (with a Pension Sharing Order), or

• Trading it off against other assets (offsetting)

…it’s the figure most people start with.

But Here’s the Catch

CEVs aren’t always what they seem. Here’s why:

• A pension might promise £10,000 a year for life - but the CEV might only be £200,000. That may sound like a lot, but buying that same income yourself could cost far more.

• Some schemes - especially public sector ones - produce low CEVs that don’t reflect the true long-term value.

• Two pensions with the same CEV might offer very different outcomes in real life.

That’s why relying on the CEV alone can be risky — especially in complex cases.

So, How Do You Get a CEV?

You ask your pension provider. Most will provide one free each year.

You may need to:

• Fill in a form

• Prove you’re divorcing or separating

• Wait a few weeks (4–12 is typical)

If you’re working with a solicitor or a PODE, they can often request it for you — but they’ll need a signed Letter of Authority first.

When is a CEV Not Enough?

In straightforward cases, the CEV can do the job. But in others - particularly where:

• The pension includes a promised future income, guarantees or unusual benefits

• The values are high or complex

• Offsetting is being considered

…it’s wise to get input from a specialist. A Pensions on Divorce Expert (PODE) can analyse the pension properly and recommend what’s fair.

The Bottom Line

A CEV is a helpful starting point. But it’s not the full story.

If you want to avoid mistakes - or make sure you’re not losing out - don’t make big decisions based on one number alone.

We’re here to help you understand what your pensions really mean to you, in plain English.