Posted August 21st, 2012
Question: The pension provider is refusing to implement the Pension Sharing Order without the signature of my ex spouse. Ours was an acrimonious divorce and he is extremely unlikely to comply with this request. What can I do?
Answer: Often Pension providers have a number of requirements to be completed by both parties, including the court documentation and other such requests, such as signing an indemnity by the ex spouse.
If it is not possible to do this then I would remind the Trustees of their obligations under the Court Order/Pension Sharing order and that it is their responsibility to implement the order in a timely manner. If they do not do so, threaten to report them to the Pension Regulator. This usually has the desired effect and hopefully your Order will be implemented promptly.
Posted August 16th, 2012
I was recently contacted by a client who had not implemented their Pension Sharing Order since 2003.
Not only was this a breach of the original order, there were a number of consequences that had occurred since the order was made. These were:
- The Cash Equivalent (CE) was recalculated at £213000 rather than the original £280000.
- Therefore my clients share of the CE was considerably lower, by £67000.
- The reason for this was that her husband had drawn benefits and as a consequence of this she was unable to take any lump sum from the pension.
- As the order was over 7 years old she had no recourse to go back to her solicitor for redress.
Therefore if you have a pension sharing order and are looking to implement it, my advice is to do so immediately. In the case of my client she has lost out on £67000 of CE and 25% pension commencement lump sum of the higher share figure £280000 / 50% (c.£.35,000)
Don’t let this happen to you please get in touch today!
Posted October 1st, 2010
This week I was contacted by a very concerned lady whose ex husband had not paid the implementation charge following their divorce and she wanted to know what she could do. Often, at settlement it will be agreed that 100% of the costs are paid by the other party and this will be seen as a small victory.
The implementation period will not start until all of the paperwork and the pension sharing order charges are paid. So it is important to get the charges paid as soon as possible to avoid delays. When you are relying on someone else to make payment this can be problematic.
The truth is that there is often very little that can be done as the costs of going back to court to enforce the pension sharing order can often be prohibitive. Inevitably, the only option is to pay the costs themselves.
So perhaps, prevention is the key. It is possible in some circumstances for the charges to borne from the cash equivalent transfer value. Alternatively, it might be appropriate to look to share the pension schemes which do not bear any charges. Yes, they do exist.
Here are some examples of the level of pension sharing costs involved:
UBS – £2,250 plus VAT
Police Pension Scheme- £400 plus VAT
Standard Life – £250
AVIVA – £0
With such amounts being charged and likelihood to rise in the future (see blog here) it is important to consider what the pension sharing order costs will be before agreeing the percentage split. Or deciding to pay these charges.
If this is something you would like further information on this please contact us.
Posted September 10th, 2010
In one of my previous blogs I covered the delays that can happen at the start of the process and lead to a postponement of implementation notice being issued. This blog covers the problems caused when the four month implementation period is breached and details what you can do about it.
The regulations set the timescale for implementing a pension sharing order at four months which you would expect is plenty time for the trustees of any pension scheme to organise the internal transfer or external transfer of pension assets. But it is not the trustees who usually arrange the implementation of a pension sharing order but the pension scheme administrator. Unfortunately, this can mean delays because the standard of pension administration differs hugely between administration providers and pension schemes.
Part II of the Pension Sharing (Implementation and Discharge) Regulations 2000/1053 sets out the requirements in terms of notifying the Pension Regulator of failure of the trustees to implement the share within the 4 months. This section also sets out the circumstances in which the trustees may seek an extension and penalties which may be applied (maximum £1,000 for individuals, £10,000 otherwise). Making the trustees aware of their duties to report to the Regulator should be enough to scare them into action.
In fact, in such cases it is usually the threat of going to the Regulator about delays which really gets things moving.
If you are suffering delays in the implementation of your pension sharing order or you are looking to avoid such problems, please contact me on 0800 092 1229 or email email@example.com
Posted September 3rd, 2010
Once your pension sharing order or pension sharing annex is received by the trustees together with all of the additional documentation (see previous blog – http://bit.ly/azX9do) it is quite normal for the implementation period to start.
Given that it can take up to four months for implementation to be completed it is a good idea to get this started as soon as possible. In my experience, sharing orders either complete in the first month or the fourth!
But often the pension sharing order may be badly worded or incorrectly drafted and this often leads to it being immediately rejected by the pension scheme involved. They will issue a postponement of implementation notice summarising why the pension sharing annex has been rejected and what is required to amend it.
Recent examples of cases I have worked on where the order was rejected (before I got involved!) are:
- The title of the pension scheme was incorrectly stated (Part C- Form P1).
- The trustees of the pension scheme were incorrectly stated (Part C – Form P1).
- The former names section of the order was incomplete (Part B – Form P1).
- The new pension arrangement is not stated (Part F&G – Form P1)
Once advice is taken, it can often be a relatively straightforward matter to get the order amended but it does need to then go back to court to be restamped, which can add to the time delays.
If you are considering how to draft your pension sharing order or you require further assistance on a incorrectly drafted pension sharing order, please contact me on 0800 092 1229 or email firstname.lastname@example.org
Posted August 31st, 2010
In my previous blog, I set out a summary of some of the common issues I am asked to help with in relation to the implementing of pension sharing orders. Here I will add some further information on issues surrounding the whereabouts of such orders.
Under the regulations, the court should send the pension sharing annex (form P1) within 7 days of the making of the pension sharing order or of decree absolute (whichever is the later) to the pension scheme involved.
This is immediately where a breakdown in communication can occur because the implementation period will not start until the pension scheme has all of the documentation necessary and received payment of its implementation fee. This documentation will not only include the decree absolute and the pension sharing annex but also birth certificates, and often, where the share is being dealt with by way of an external transfer, details of the new pension arrangement and a trustees indemnity. There can be other requirements.
I am often approached by clients who were not aware that they even had to make a decision on a new pension arrangement. This can hold up the process or even result in the existing scheme deciding upon a default option, which may not be appropriate.
I have even had on one occasion a client pass me a court stamped pension sharing order which had been kept safe in her drawer. It was 4 years old!
So it is important to keep tabs on where your pension sharing order is and who is responsible for making sure the order is implemented in a timely manner.
If this affects you and your pension sharing order has disappeared or you are unsure of what to do next, please contact me on 0800 092 1229 or email email@example.com
Posted March 29th, 2010
Of all the things that need to be understood in the context of pensions and divorce I consider this one to be the biggest. There is a major difference between the Valuation Date and the Valuation Day and it is imperative you understand it.
In England, Wales and Northern Ireland, the date on which the transfer value request, Cash Equivalent Transfer Value (CETV) or Cash Equivalent of Benefit (CEB), is received by the trustees or scheme provider becomes the Valuation Date.
This becomes the value which all of the negotiations for your settlement will be based on. For example, if you are advised by your solicitors, having received an actuary’s report, that the pension needs to be split 60:40 this will be done on the basis of the value on the Valuation Date.
However, this is NOT the value which will be used when the final benefits are calculated. The actual value will be calculated at some point within the four month implementation period and this date becomes the Valuation Day. The implementation period starts on the Transfer Day, which is the day the pension sharing order takes effect, or, if later, on the day the pension scheme has the prescribed information needed to implement the pension sharing order.
The period of time between the Valuation Date and the Valuation Day can be considerable and a lot can change in a pension during this time, which can have knock on effect on the valuation and subsequently the benefits derived from it.
If you would like to understand more about how the Valuation Date and Valuation Day might affect you and your benefits, call or email me for a confidential chat.
firstname.lastname@example.org or 0800 092 1229