Posted January 13th, 2012
I have recently been asked to assist in a challenging divorce case involving a client who was in serious ill health. Serious ill health is defined as life expectancy of 12 months or less and there are strict rules surrounding the payment of benefits in this situation.
I was asked to provide guidance on a number of scenarios:
- The benefits are drawn now based on normal health.
- The benefits are drawn now based on serious ill health provisions.
- What happens on death.
- What benefits might be paid to children.
- What benefits would be payable if the pensions were subject to 100% pension sharing orders.
Where the planning opportunities arose was in the difference between benefits that been crystallised (i.e. in payment) and uncrystallised (i.e. those that were not).
For uncrystallised benefits it is possible for a tax free lump sum to be taken in lieu of the whole of the pension benefits. But for crystallised benefits this is not
possible and either ill health retirement provisions apply for final salary benefits or impaired life annuities or drawdown for money purchase with the option
for lump sum benefits to be paid upon later death.
It was important to understand each client’s needs and what they were looking to achieve. Then it was a case of balancing the desire for a tax free payment now versus protecting the value of the benefits that had been accrued to date.
If your divorce settlement / pension sharing case is affected by these issues why not get in touch for a free, confidential, no obligation chat on 0800 092 1229 or send an email advice@thedivorceifa.co.uk
Tags: Crystallised, drawdown, Final Salary, Impaired life annuities, lump sum, Money Purchase, Pension, Pension Benefits, Pension Sharing, Serious Ill Health, Uncrystallised | Posted in Pension Sharing |
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Posted August 13th, 2010
Impaired life annuities provide a greater pension income to those with shorter life expectancies than would be available from standard annuities. Impaired annuities are intended for serious conditions such as:
• Chronic heart disease
• Cancer (secondary and some primary)
• Chronic Lung Disease
• Parkinson’s Disease
• Alzheimer’s Disease
Please note this list is not exhaustive.
Enhanced annuities also provide an increase over the standard rate available and are given for lifestyle conditions such as
• Diabetes
• Heart attack
• Chronic asthma
• High blood pressure
• High Cholesterol
Again, this is not an exhaustive list.
The market is maturing and there are providers who specialise now in areas such as smoker annuities and more recently, postcode annuities. These work on the basis that statistically, people in different parts of the UK have different life expectancies.
Many people when taking their pension share on divorce decide to purchase an annuity. If you are considering purchasing an annuity as part of your pension share, please stop and consider whether you might benefit from one of these annuities.
If you require any further assistance, please contact us on 0800 092 1229 or email advice@thedivorceifa.co.uk
Tags: Alzheimer's disease, Annuities, Annuity, Cancer, Chronic asthma, Chronic heart disease, Chronic lung disease, Diabetes, Divorce, Enhanced annuities, Greater pension income, Heart attack, High blood pressure, High Cholesterol, Impaired life annuities, Lifestyle, Parkinson's Disease, Pension, Pension and divorce, pension share, Postcode annuities, Shorter life expectancies, Smoker annuities, Standard annuities, Standard rate | Posted in Annuity, Ill Health |
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