Posted November 20th, 2012
…..and that figure is unnervingly low. There are nearly twice as many women over 50 without a pension when compared with men over 50.
It seems clear then, that many women are not even asking the question upon agreeing a divorce settlement. It is more important now than ever before that the question of sufficiency in retirement is tabled during in settlement talks. It is just as relevant as child care and the split of matrimonial assets.
It’s pretty straight forward. If you have sacrificed a career to raise children, or even settled in a job just to help make ends meet within the marriage, there is a fair question of income equalisation after retirement that needs to be asked and answered.
I am an IFA with expertise in the field of Pensions on Divorce. If you are going through a divorce and need advice, or if the issue has never been raised for you and you feel that this is something that you would like to talk about then please get in touch:
Image credit: flickr.com/tax credits
Posted September 17th, 2012
The role of solicitors and mediators during divorce is well documented and shouldn’t be taken lightly or underestimated as many self representing clients find out to their cost.
However, aside from wrangling over custody arrangements, would you leave it to either professional party to value your house during a split of assets?
No? So why is it that little or no heed is often taken in divorce proceedings with regards to the pensions?
As I stated in the above article, there are many solicitors that I work with that do have the necessary skill set to enable you to achieve a fair outcome, often calling in the necessary professionals to assist with their advice.
I have recently been contacted by two claim companies and an independent solicitor looking at past settlements and wanting referrals from me for potential claims they can investigate. They are investigating whether the true value of the pensions has been ignored, overlooked or misunderstood as part of the overall settlement.
This is no coincidence and perhaps a sign of the times but 12 years after the legislation was passed bringing pension sharing into force I am still seeing big mistakes being made.
To avoid having to go through this with your pension sharing case then please get in touch now on 01204 663904.
Posted September 26th, 2011
I have recently completed a pension sharing case where the length of time for the work from start to finish was 14 months. This is not unusual.
In this time the clients Cash Equivalent Transfer Values, and her share of them has increased by 12%. Not bad considering what the markets have done in the intervening period but more luck than judgement.
This is not always the case, and often the value of pensions etc can reduce over this period of time. So we have actually been quite lucky here.
With the implementation period being up to 4 months, it is important to get your Pension Sharing Order, Consent Order and any other documentation required by the ceding scheme to get the pension credit implemented as soon as possible. The quickest I have managed to get a pension
order and consent order implemented is less than three weeks from start to finish.
If you need assistance with your pension sharing why don’t you get in touch on 01204 663904 or email me Phil@thedivorceifa.co.uk
Posted March 4th, 2011
“I am about to receive a pension sharing order and need advice about investment”
This is a very popular question and the first thing I always do is to double check the information provided on the pension sharing options with the existing pension scheme. The reason I double check is often the information provided to the spouse is appalling and it is often incorrect. I see misinformation provided on a daily basis!
Internal transfer or external transfer?
Sometimes the pension scheme will offer an internal transfer of benefits and you can remain in the scheme. Often the benefits on offer to you are good and worth staying in the scheme for. You should be looking for true shadow membership.
But if you have to exit the scheme (and this is very common) it is necessary to check what schemes are available for the pension credit to go into. Questions to consider are:
• Do you have any personal pensions already?
• Do you have a works scheme? And can this take the transfer?
• If not, what is on offer from the market.
Advice on the most suitable pension to transfer your pension credit should be taken. Ensure your adviser is suitably qualified. The Financial Services Authority insists on a certain level of qualification to undertake this work.
On an external transfer the investment of the pension will be important because you will be taking on two new risks – how it performs between now and your retirement and how much income you will eventually draw out at retirement.
If you are a long time from retirement you could consider investing in growth assets (equities/property) which tend to be more risky or if it is a short time to retirement more defensive assets (cash / gilts) to protect your capital value. Setting a goal in terms of retirement income is also advisable.
When working with my clients I undertake a thorough review of their attitude to risk and tolerance to risk, their options in terms of pension sharing and from this provide advice on the most suitable pension arrangement and investment strategy to meet their goals.
If you would welcome some assistance on your pension sharing order, your options and how to get it implemented, please feel free to contact me on 0800 092 1229 or email me firstname.lastname@example.org
Posted January 21st, 2011
The lifetime allowance is back in the news and will from April 2012 reduce from £1.8m to £1.5m.
But how does the lifetime allowance work in the context of divorce and pension sharing? In particular, how does it affect pension credits and pension debits now? And how will this reduction affect pension sharing orders going forward?
Where a pension credit is awarded this becomes an asset of the new owner and will form part of their overall pension entitlement which (at some point in the future) will be tested against their lifetime allowance.
Therefore, it is advisable to check (in high value cases) to see if the amount of the credit will take them over the lifetime allowance. If it will, then they may want to consider an alternative strategy or reduce the amount of the pension share.
A pension debit does not count towards the lifetime allowance of the member whose pension was shared. This means it is only the benefits that they actually receive that will be tested against the lifetime allowance.
If already in payment, the ex-spouse can apply for an increase in their standard lifetime allowance as the pension has already been tested against the lifetime allowance. The increase factor is found by dividing the pension credit by the standard lifetime allowance in force when the pension sharing order is made.
Where a debit arises then rebuilding of lost pension may be advisable.
Future Pension Sharing Orders
With a reducing lifetime allowance it will be even more important to make checks before proceeding. The limit will be lower and therefore, potentially more people will be affected.
If this issue affects you or your client, please contact us on 0800 092 1229 or email email@example.com
Posted December 10th, 2010
Do you know what the default option is when considering pension sharing?
In my previous blog I detailed the difference between an internal transfer and an external transfer. The default option is the underlying option that the pension scheme will implement should the pension credit member not decide how to implement the pension sharing order.
Sometimes, this can be an internal transfer or more often, it is an external transfer to a pension arrangement of the pension scheme / trustees choosing.
So, to avoid having your pension sharing order implemented by someone else or receiving a poor pension by default it is important to check your options first and let the trustees/pension scheme know what you want. It really is a case of taking the bull by the horns!
I keep a check on which pension scheme offers what. If you would like to know more about default options and pension sharing, please contact me on 0800 092 1220 or send me an email – firstname.lastname@example.org
Posted December 3rd, 2010
Do you know the difference between an internal transfer and an external transfer in relation to pension sharing?
It is important that you do because the consequences of choosing the wrong one can be expensive.
Internal transfer – this is where the pension scheme deals with the pension share by way of an internal transfer of benefits between one party and the other (no benefits transfer away from the original pension scheme).
A pension credit is created and this will either be dealt with by offering shadow membership (i.e. matched benefits with the existing scheme – final salary for example) or alternative benefits will be offered. Sometimes these can be significantly less valuable than exact shadow membership and so it is worth checking first. Sometimes you have a choice other times you don’t.
The other route is an external transfer – this is where the pension scheme involved deals with pension sharing by way of an external transfer. i.e. they insist that the pension credit be transferred out to a new arrangement of the pension credit holder’s choosing. Therefore, these benefits are automatically different to the existing (final salary) scheme but which scheme should you transfer to?
So it pays to check what is on offer when pension sharing before entering negotiations. If you know that shadow membership is available this can be very valuable. But what if you have to transfer out would you know what to do?
I keep a check on which pension scheme offers what. If you would like to know more about internal and external transfers when pension sharing, please contact me on 0800 092 1220 or send me an email – email@example.com
Posted November 12th, 2010
This was the terminology given to benefits from a pension credit arising from the pension sharing of contracted out benefits (e.g. State Earnings Related Pensions, aka SERPS or Second State Pension aka S2P).
These were abolished from 6 April 2009 and with this went the restrictions – no lump sum and benefits to be drawn from 60 onwards.
It is now possible to take a pension commencement lump sum and draw benefits from age 55 onwards.
For more information on how to share SERPs or S2P, please contact me.