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 |
Comments: No Comments yet!
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.
Investment
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 phil@thedivorceifa.co.uk
Tags: external transfer, internal transfer, Investment, Pension, Pension Credit, Pension Scheme, Pension Sharing, Pension Sharing on Divorce, Pension Sharing Options, pension sharing order, Personal Pension, Retirement, Shadow Membership, Transfer | Posted in Pension Sharing |
Comments: No Comments yet!
Posted January 24th, 2011
This month I was approached by two clients with issues surrounding the timeliness of the implementation of pension sharing orders.
Case 1 – Pension Sharing Order not implemented since 2003
Originally the client agreed a 40% share in her ex husband’s Armed Forces Pension back in 2003 and eight years later she is still awaiting its implementation. She should have become entitled to her pension in 2008. In the meantime, her ex husband has continued to receive his pension with no deduction.
What has exacerbated the issue is the change from RPI to CPI revaluation (see my blog on this here) and so the Armed Forces Scheme will not implement whilst they revisit the valuation.
Unfortunately, there was not a lot I could do to rectify this situation other than to advise her to complain through the scheme’s internal dispute resolution and failing that approach the Pension Ombudsman.
Case 2 – Pension Sharing Order - Delaying Tactics?
It is not unusual for some trustees to use every excuse in the book to avoid implementing pension sharing orders. This case had the lot:
- They lost the pension sharing annex and new copies had to be sent.
- They claimed that they had not received all the Regulation 5 info, and requested originals to be faxed through only for them to accept they had them all the time.
- Claimed that the annex had no date (but the date was on there and it was stamped and sealed).
- Once all this was cleared up decided that the pension sharing annex was on “the wrong form.”
Again, there was little I could do after the event.
If any of these issues affect you or you would like more information about how we advise on pension sharing, please contact us on 0800 092 1229 or email phil@thedivorceifa.co.uk
Tags: 40% share, Annex, Armed Forces Pension, Implementation of Pension Sharing Orders, Pension Sharing, Pension Sharing Annex, pension sharing order, Trustees | Posted in Pension Sharing |
Comments: No Comments yet!
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?
Pension Credits
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.
Pension Debits
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 phil@thedivorceifa.co.uk
Tags: Asset, Divorce and Pension Sharing, Future Pension Sharing Orders, Lifetime Allowance, Pension Credit, Pension Credits, Pension Debit, Pension Debits, Pension Entitlement, pension share, Pension Sharing, Pension Sharing & the Lifetime Allowance, pension sharing order, Pension Sharing Orders, Standard Lifetime Allowance | Posted in Pension Sharing |
Comments: No Comments yet!
Posted December 17th, 2010
Sometimes when dealing with pensions it is easy to miss the fact that additional contributions have been paid. This is because not all additional voluntary contributions (AVCs) will be reflected in the cash equivalent transfer value (CETV) being quoted.
Where AVCs are being paid on a money purchase basis they will often accrue in a separate insurance company policy alongside the main scheme benefits.
So, my advice when dealing with a final salary scheme on pension sharing is to ask the question – have any AVCs been paid? It has not been unusual for an extra £30,000 plus of CETV to account for the AVCs and like the main scheme benefits they are able to have a pension sharing order placed against them.
If you would like to discuss pension sharing and AVCs, please contact me on 0800 092 1220 or send me an email – phil@thedivorceifa.co.uk
Tags: Accrue, Additional Contributions, Additional Voluntary Contributions, AVCs, Cash Equivalent Transfer Value, CETVs, Final Salary Scheme, Final Salary Scheme on Pension Sharing, Insurance Company Policy, Main Scheme Benefits, Money Purchase, Money Purchase Basis, Pension Sharing, Pension Sharing and AVCs, pension sharing order | Posted in Pension Sharing |
Comments: No Comments yet!
Posted December 13th, 2010
Pension Sharing Order – Need advice now?
Why not book a free no obligation review of how pension sharing affects you. Need some specific advice on a pension sharing order – I can provide it!
Unfortunately, there is a lot of misinformation out there on what can and cannot be done with pension sharing orders.
I offer a free 30 minute consultation by telephone so why not call me now on 0800 092 1229 to arrange or send an email to phil@thedivorceifa.co.uk Virtual sessions available webcam too!
Tags: 30 minute consultation, Advice, Free, Misinformation, No obligation, pension sharing order, Pension Sharing Orders, Review | Posted in Pension Sharing Order |
Comments: No Comments yet!
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 – phil@thedivorceifa.co.uk
Tags: Default Option, Default Options and Pension Sharing, external transfer, Implement, Implementing the pension sharing order, internal transfer, Pension Arrangement, Pension Credit, Pension Credit Member, Pension Scheme, Pension Sharing, pension sharing order, Trustees | Posted in Pension Sharing |
Comments: No Comments yet!
Posted November 8th, 2010
I was approached this week by a lady wanting to know whether she could share a pension which she thought might be in the Pension Protection Fund (PPF).
The scheme in question, the Turner & Newall Pension Scheme, applied to go into the PPF in April 2006. Despite four years passing this pension scheme has not been transferred into the PPF which for the lady in question was good news.
This is because under current legislation a pension in assessment for the PPF can have a pension sharing order implemented against it whilst one that has transferred into the PPF cannot. This might seem ridiculous but it is to do with the “pension rights” changing to “compensation payments” after acceptance into the PPF, hence a pension sharing order cannot be applied.
There is good news on the horizon though; the PPF should be in a position from next April to implement pension shares for schemes which have transferred with effect from April next year (assuming that the draft legislation is implemented).
So if your divorce involves a pension which is in assessment for the PPF or is already in the PPF the timing of a pension sharing order is important. For more information on this issue, please feel free to contact me.
Tags: Assessment, Compensation Payments, Divorce, Pension, Pension Protection Fund, Pension Rights, Pension Scheme, Pension Shares, Pension Sharing, pension sharing order, PPF, Turner & Newall, Turner & Newall Pension Scheme | Posted in Pension Protection Fund |
Comments: No Comments yet!
