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 August 22nd, 2012
An interesting development with Divorce Lifeline – www.divorcelifeline.co.uk.
It is interesting to note some of the claims being made by the company in relation to pensions and also their credentials to be in this market in the first place.
However, there is a growing trend towards looking at the settlements that clients are getting and it is in the divorce solicitors best interests to look at how a pension settlement is arrived at.
As a Resolution Accredited Independent Financial Adviser, I do see many mistakes made and we are here to help.
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 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 email@example.com
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 June 29th, 2009
When considering how to deal with pensions within a divorce settlement it is important to be aware of the many different factors which can affect the transfer value. Recent events in equity markets coupled with changes in regulations are proving that these values are rarely static. Clients, lawyers and advisers need to be vigilant when dealing with transfer values, particularly if the settlement takes time to agree.
Pensions can be separated into two main distinct types – money purchase or defined contribution or final salary or defined benefit. Depending on which type of pension you are dealing with has a major bearing on the issues surrounding transfer values.
Changes in the way in which actuaries calculate cash equivalent transfer values are having major impacts on settlements going forward. Since October 2008 the basis on which these values are calculated has switched from a broadly uniform one (under actuarial guidance note 11) to an individual scheme decision taken by their trustees.
So much so that values have been seen to double or halve depending on the circumstances and the schemes involved. Therefore, it is important to consider the following:
• Clients need to be aware of the potential fluctuations and their expectations managed.
• Up to date valuations are vital especially should the current valuation pre date October 2008.
• The cost of a new valuation might be a small price to pay to avoid future conflict.
When dealing with money purchase pensions such as personal pensions the surrender value of the plan should be treated as the transfer value. This value can often be much less than the more readily quoted current value. Penalties, Market Value Adjustments and product charges on these contracts can affect these values and will change over time.
The key determinant of whether the fund value will move (up or down) is the amount of risk being taken within the fund. This will depend largely on how, where and what it is invested into. Therefore, it is just as important to understand what risks are being taken within these types of pensions as to worry about the overall amounts involved. It is not unusual to find within self invested pensions – high risk investments such as AIM shares or property.
My experience of risk tolerances using the FinaMetrica profiler (see www.finametrica.com) is that men’s risk tolerances are often much higher than women’s. Do your clients truly understand the amount of risk being taken within their (or their husband’s) pension?
Perhaps it might be sensible to find out their risk tolerances and consider switching investments to a less risky strategy for the duration of the divorce proceedings.
If you would like more information, please call us on 01204 663904 or contact us by email on email@example.com