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 advice@thedivorceifa.co.uk
Tags: Delays in Implementation, external transfer, Four Month Implementation Period, Implementation, Implementation Period, internal transfer, Pension Administration, Pension Assets, Pension Regulator, Pension Scheme, Pension Scheme Administrator, Pension Sharing, pension sharing order, Postponement of Implementation Notice, Trustees | Posted in Pension Sharing |
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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 advice@thedivorceifa.co.uk
Tags: Advice, Badly Worded, Court, Form P1, Four Months, Implementation, Implementation Period, Incorrectly Drafted, Pension Arrangement, Pension Scheme, Pension Sharing Annex, pension sharing order, Pension Sharing Orders, Postponement of Implementation Notice, Rejected, Restamped, Trustees | Posted in Pension Sharing |
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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 advice@thedivorceifa.co.uk
Tags: Court Stamped, Decree Absolute, Default Option, external transfer, Form P1, Implementation Fee, Implementation Period, Order, Pension, Pension Scheme, Pension Sharing, Pension Sharing Annex, pension sharing order | Posted in Pension Sharing |
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Posted August 16th, 2010
I am often asked who can request pension valuations and whether there should be a charge.
It should be noted that the valuation will only be provided to the scheme member and not their spouse. The pension scheme will usually allow for one free Cash Equivalent Transfer Values (CETV) quotation to be provided each year.
However, there are occasions when a charge will be applied and I have set out some examples below:
- When a further valuation is requested within the one year time frame.
- Where the pension is in payment. Because a pension in payment cannot be transferred a CETV is irrelevant. The correct basis is a cash equivalent of benefit (CEB) and there will be a cost.
- When the valuation is needed more quickly than the scheme’s normal turnaround. For example, the NHS pension scheme usually works to a 3 month turnaround time, although, they will provide it in less than 6 weeks for a charge of £300 plus VAT.
- When the member is within 12 months of normal retirement date.
- Servicing members of the Armed Forces Scheme who already qualify for immediate benefits as soon as they retire. For those members with reckonable service of more than 16 years for officers and 22 years for other ranks the scheme levies a charge of £150 plus VAT. Where the service is less than 16 years and 22 years respectively there is no charge.
The National Association of Pension Funds (NAPF) has set out guidance for pension scheme trustees on charges and you can find further information here. NAPF gives a range of charges for you to judge how much you are being charged against. Note that it is only guidance and that some schemes will charge more.
If you would like further information on CETVs, valuations and charges, please contact us on 0800 092 1229 or email advice@thedivorceifa.co.uk
Tags: Armed Forces Scheme, Cash Equivalent of Benefit, Cash Equivalent Transfer Value, CEB, CETV, Charge, Divorce, Immediate benefits, NAPF, National Association of Pension Funds, NHS Pension, NHS Pension Scheme, Normal Retirement Date, Pension, Pension & divorce, Pension in Payment, Pension Scheme, Pension valuations, Reckonable service, Scheme, Scheme member, Spouse, Valuation, Valuations | Posted in Transfer values |
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Posted February 8th, 2010
In many occupational schemes (especially the statutory ones – e.g. Police, Armed Forces) there has been a disparity between the normal retirement age of the member and that given to a pension credit member (the ex spouse). For example, the member can retire from the pension scheme at age 52 but the ex spouse cannot retire until age 60.
In addition, where the pension is in payment, there will be an immediate reduction of benefit for the member but the ex spouse’s pension will not kick in until age 60 (which could be many years away).
This issue has been neatly termed as “income gap syndrome” and it has been found not to go against the anti discrimination provisions of European Law.
Of course, this assumes that the ex spouse decides upon an internal transfer as the means to facilitate the pension share. There may be many reasons why the other option (an external transfer) is appropriate, but there will many situations where the only choice available is an internal transfer.
Regulations which came into force in April 2009 made provision for a partial solution to this issue which some of the statutory schemes are now starting to implement. The NHS scheme will now permit pension credit members to draw benefits after age 50 (or 55 from 6 April 2010) whilst an Armed Forces (2005) pension credit member can draw benefits at age 55. It should be noted that actuarial reductions will apply for early payment.
From a financial planning point of view it is wise to review the drawing of a pension credit benefit in line with your overall goals and objectives to ensure that any reduction is understood and budgeted for.
For more information on this please contact me on 0800 092 1229 or contact me by email, phil@thedivorceifa.co.uk
Tags: Actuarial Reductions, Armed Forces, Divorce, Early Payment, Ex Spouse, Financial Planning, Income Gap Syndrome, internal transfer, NHS Scheme, Normal Retirement Age, Occupational Scheme, Pension Credit, Pension Credit Member, Pension Scheme, pension share, Police, Spouse, Statutory Scheme | Posted in Pension Credit |
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Posted November 23rd, 2009
It is often stated that Cash Equivalent Transfer Values (CETVS) are not an ideal method of calculating the true value of a defined benefit pension scheme on divorce. This is because they merely provide a snapshot of the value of a member’s pension benefit at a particular point in time.
What is most surprising is by how much these valuations can undervalue these benefits and therefore, how the unwary could find that they are losing out on potentially thousands of pounds.
I have highlighted below some examples taken from a survey done by the actuaries, Bradshaw Dixon Moore based on a sample of their own reports. The findings are startling and what is most surprising is the variations between the same schemes, particularly the Public Sector and Uniformed Services schemes.
|
Scheme
|
CETV
|
Actuarial
|
Difference
|
|
|
|
|
|
|
NHS
|
£120,000
|
£164,000
|
+28%
|
|
Local Government
|
£84,000
|
£138,000
|
+64%
|
|
Police
|
£283,000
|
£520,000
|
+84%
|
|
Army
|
£105,000
|
£394,000
|
+275%
|
|
Private Company
|
£380,000
|
£608,000
|
+60%
|
You can get the full details of their findings here. Pension-CETV-value-comparisons
I have been asked to comment recently on whether actuarial valuation reports are worthwhile and what value they add to financial negotiations. Many clients are naturally trying to reduce costs during divorce and see this as a potential cost saving.
My advice is that where defined benefits are involved, regardless of the scheme, an actuarial valuation is a necessity. By finding out the true value of the pension assets you will be in a much better position to negotiate a fairer settlement.
For information on any of the information provided here, please contact me at advice@thedivorceifa.co.uk
Tags: Actuarial Valuation Report, Army, Bradshaw Dixon Moore, Cash Equivalent Transfer Value, CETV, Defined Benefit, Divorce, Local Government, NHS, Pension, Pension on Divorce, Pension Scheme, Police, Public Sector, Settlement, Uniformed Services | Posted in Transfer values |
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