Posted September 6th, 2010
Pension sharing is a confusing and complicated part of any divorce settlement and there are many issues to be aware of before proceeding. Some examples include:
- The fairness of a cash equivalent transfer values (CETV).
- Internal transfer or external transfer?
- Moving target syndrome?
- Default options.
Therefore, it was a refreshing change to be contacted by a client this week who had received notification from her pension provider (Prudential) that she HAD to take financial advice before they would agree to accept the pension sharing order.
To avoid the pitfalls above it is important to take financial advice from a competent adviser, preferably one who is a Resolution Accredited Independent Financial Adviser (See link here). You may also wish to employ the services of an actuary that advises on pension and divorce cases.
If this is you and you are looking for financial advice on a pension sharing matter or if you require further information, please contact me on 0800 092 1229 or email advice@thedivorceifa.co.uk
Tags: Actuary, Cash Equivalent Transfer Value, CETV, Competent Adviser, Default Option, Default Options, Divorce Settlement, external transfer, Financial Advice, internal transfer, Moving Target Syndrome, Pension and divorce, Pension Provider, Pension Sharing, Pension Sharing Matter, pension sharing order, Prudential, Receiving scheme, Resolution, Resolution Accredited, Resolution Accredited Independent Financial Adviser | Posted in Pension Sharing |
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Posted August 20th, 2009
Since 2000, a pension sharing order has been available as an option on divorce. With the ability to achieve a clean break this should be the option of choice for most divorce cases where the pension benefits are significant (and earmarking / offsetting have been discounted).
A lot of focus is rightly given to ensuring that an equitable pension share is achieved and here the use of a suitable actuary is advisable. However, in my opinion, less time is given to the options available once the pension share has been calculated and many clients approach this stage with unnecessary fear and trepidation.
Options
With a pension share there are two options – an internal or external transfer – and either option can have its merits depending upon circumstances.
With an internal transfer the pension does not physically move from the existing scheme but a debit and credit is created to satisfy the pension share. Most importantly, the internal scheme benefits can differ significantly. For example, some final salary schemes offer shadow membership whereby the same defined benefit rights generously apply to the new member whilst others provide poorer value money purchase equivalents.
With an external transfer the fund value of the pension share is physically transferred to a new arrangement in the individual’s name, with the associated issues of understanding the investment and annuity risks involved but having the benefit of control.
Considerations
Here are a few suggested considerations which will assist in deciding which type of transfer is appropriate.
* How flexible is retirement and who decides when retirement can start.
* How much pension income will be payable at retirement and how secure is it.
* How much risk is involved / could my pension fall in value.
* What are the death benefit arrangements and who will ultimately benefit.
* Can future pension contributions be paid.
* What are the charges involved.
If you would like more information on how we deal with pension sharing, please call us on 01204 663904 or contact us by email on advice@thedivorceifa.co.uk
Tags: Actuary, clean break, death benefit, Divorce, earmarking, external transfer, Final Salary, internal transfer, offsetting, Pension, pension share, pension sharing order | Posted in Pension Sharing |
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Posted July 9th, 2009
I have attached below a very useful checklist for lawyers to use when working with clients with Public Sector pensions.
Public Sector Scheme Checklist
This checklist has been produced by Bradshaw Dixon Moore Limited and they have kindly given me permission to post it here. You can access further information on their actuarial services below:
www.bradshawdixonmoore.com
In addition, they also provide useful information and comment on divorce matters at:
www.ancillaryactuary.co.uk
If you require further information on The Divorce IFA, please call us on 01204 663904 or by email advice@thedivorceifa.co.uk
Tags: Actuary, Bradshaw Dixon Moore, Final Salary, Pension, Public Sector | Posted in Actuary |
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