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 January 3rd, 2012
We are experiencing a higher than normal level of calls in respect of these pension schemes, and in particular, the issues regarding drawing benefits early.
The armed forces scheme has taken a welcome stance which is that pension credit members can draw benefits at age 55, rather than age 60 which continues to be the case under the Police Pension Scheme and the Fire Service Pension Scheme. Albeit there is a reduction for early payment!
It is hoped that at some point, all of the schemes will draw into line with each other, however the current guidance appears to be that this is unlikely.
If you are experiencing difficulties with your pension settlement in any of these pension schemes, why not get in touch for a chat on 0800 092 1229 or email phil@thedivorceifa.co.uk
Tags: Armed Forces, Fire Service Pension Scheme, Pension, Pension Schemes, Pension Sharing, Police Pension Scheme | Posted in Pension Sharing |
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Posted December 27th, 2011
I have recently contacted by a UK national living in the US and divorcing in the USA. She wanted to return to the UK and implement a pension sharing order that the US court had applied against her husband’s UK pension and second state pension.
It is not possible for a UK pension scheme to implement an order made in a non UK court. Therefore it is often perceived that overseas divorces mean that a UK asset, such as a pension, cannot be subject to a pension sharing order.
However, in the Matrimonial and Family Proceedings Act 1984 (Part 3) there is a provision for a court order in the UK to be made on the back of a foreign divorce.
This can be done relatively easily where there is consent, although not impossible to obtain one without consent.
The key is to ensure that the foreign court is aware of the UK’s stance on foreign court orders, and to ensure that the Part 3 regulations are followed in accordance with the foreign divorce to ensure that the UK asset is dealt with appropriately.
So if you are divorcing abroad and it involves a UK asset and you are returning to the UK, why not get in touch and see if we can help with your pension sharing order. We have experience of working with clients moving back from all over the world including USA, Singapore, Australia, Canada and Europe. Call us now on 0800 0921229 or email phil@thedivorceifa.co.uk
Tags: Divorce, Overseas Divorce, Pension, Pension Sharing, pension sharing order | Posted in Pension Sharing |
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Posted December 20th, 2011
I am pleased to announce that the Resolution Accredited Independent Financial Advisers (IFAs) have been given a nice gold logo to use to distinguish them from the family lawyers and this is now proudly displayed on our website.
As one of only ten advisers in the North West with this designation I am extremely proud of this qualification.
If you would like advice in respect of pensions and your divorce financial settlement or pension sharing why not call us on 0800 0921229 or email phil@thedivorceifa.co.uk.
Tags: Divorce, Financial Settlement, IFA, IFAs, Pension, Pension Sharing, Resolution, Resolution Accredited, Resolution Accredited IFA, Resolution Accredited Independent Financial Adviser | Posted in Resolution Accreditation |
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Posted December 20th, 2011
Every now and again a pension sharing order takes time to be implemented and I have had a recent spate of orders that have not completed in timely manner.
There is normally a good explanation as to why implementation has not occurred and typically there will be outstanding documentary requirements or the order is invalid due to a typing error, or incorrect policy number etc.
Another reason that often occurs is the payment of the fee for implementation has not been paid, particularly when the ex spouse is expected to pay half or all of the costs.
This should not be confused with delays that can occur once the implementation period has started. The timescale for implementation is four months from the date that all the documentation has been received and in my experience, orders tend to be completed very quickly in month one, or unfortunately, towards the end in month four.
I recently had an interesting discussion with one pensions administrator who was talking about taking the fee from the pension pot or from the credit of the ex spouse, or putting a block on them retiring so as to not delay the implementation of the pension sharing order. Whether they are able to do this is a mute point, but shows that once the order is in place the pension scheme is under an obligation to implement where possible.
If you are struggling to implement your pension sharing order or have any questions regarding it why not get in touch on 0800 0921229 or email phil@thedivorceifa.co.uk.
Tags: Implementation, Pension, Pension Sharing, pension sharing order | Posted in Pension Sharing, Pension Sharing Order |
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Posted September 7th, 2011
I have recently been dealing with two client cases where the state pension entitlements had not or were not being factored into the divorce proceedings. What a difference in outcome when I was involved early in the proceedings made…
In the first case which was at the negotiation stage, I was asked by my client whether state pensions should be included as assets in the divorce. I confirmed that (in my opinion) they should be looked at and that at the very least a BR20 valuation of the second state pension should be undertaken.
Having instructed a new lawyer the BR20 valuation was undertaken and £118,000 of pension value later this “new” asset was brought into the pension and financial settlement discussions. Result – she was able to negotiate a higher percentage share of her husband’s non state pension arrangements to the tune of
c.£60,000.
In the second case, the client had been reading my website and rang me to query why in her financial settlement (she was at the implementation stage and had pension orders and consent order completed to prove it) it had not been taken into account. My response was that it should have been. Of course, in this case it was too late because the settlement had been reached. Could she have a lost out?
To avoid this scenario, why not get in touch with me and have a conversation about your pension entitlements on 0800 029 1229 or email me phil@thedivorceifa.co.uk
Tags: BR20, Divorce, Financial Settlement, Implementation, Pension, State Pensions | Posted in Pension Sharing |
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Posted March 11th, 2011
Sometimes I am staggered by the enquiries I receive and the lack of knowledge and understanding shown by the pension trustees and companies involved in divorce towards the spouse. This one involved the Local Government Pension Scheme and highlights what can happen when the information provided to the ex-spouse is incorrect.
“I have a share of my ex-husband’s LGPS pension which I am very grateful for. He will receive his pension at 60 – 3 months before my 60th birthday. Although I have received (incorrectly as it now seems)information for 6 + years stating that I would receive my “share” at 60, I have now been told that the scheme only pays out at 65 unless I take a substantial reduction. If we had still been together this money would have all been paid at my ex’s 60th. I am only able to work part-time due to health issues. I am 54 now and struggling somewhat. I will have to take my pension at 60 regardless. I have no other income. Is there anything at all I can do? It seems so strange that something meant to even out financial situations should discriminate so much. Thank you for your time.”
This issue has a name – income gap syndrome – and it refers to the fact that the existing member will receive his pension benefits at age 60 but the pension credit member cannot access her pension on the same terms until age 65. She has to take a reduction to draw it at 60. Therefore, there is a gap which should be bridged. However, it was too late to go back as the pension sharing order had been implemented and she confirmed:
“I will take the pension credit at a reduced rate when I am 60. It is just so unfair that the LGPS sent me incorrect information which I based my future plans on.”
So check exactly what is being offered in terms of your pension sharing benefits and when they will be paid!
If you would welcome some assistance on your pension sharing options, please feel free to contact me on 0800 092 1229 or email me phil@thedivorceifa.co.uk
Tags: Divorce, Income Gap Syndrome, Pension, Pension Sharing, Pension Sharing Options, Trustees | Posted in Pension Sharing |
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Posted March 7th, 2011
“As a result of divorce, I have a pension sharing order and will have £123,000 to transfer into a pension fund. I do already have a Standard Life Personal Pension with just a few hundred pounds in it. I’ve now got the next 3 months to set up a pension fund so I want to ensure that I find the right pension.”
Following on from my previous blog this is an example of why checking – what type of pension scheme is involved and finding out what the pension sharing options are – is so important. The client was under the impression that she had to transfer the benefits externally and was worrying about investments, charges, etc.
Once I had established that the scheme involved was the Police Pension Scheme I was able to advise her that the only option available was an internal transfer. The decision making was over and it was a relatively simple exercise implementing the pension credit within the Police Pension Scheme.
Why wait until the pension sharing order has been agreed before finding out what your options are?
If you would welcome some assistance on your pension sharing options, please feel free to contact me on 0800 092 1229 or email me phil@thedivorceifa.co.uk
Tags: Divorce, internal transfer, Pension, Pension Fund, Pension Sharing, Pension Sharing on Divorce, Pension Sharing Options, pension sharing order, Personal Pension, Transfer | Posted in Pension Sharing |
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