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 January 27th, 2010
Why is writing a Will so important in divorce cases and why does an existing Will need reviewing as soon as proceedings start. Below I have set out some scenarios which may get you thinking on why the need is great.
During separation and pre divorce – Will written
Decree absolute is the final decree and marks the conclusion of the marriage. Until the parties are divorced (or their civil partnership is dissolved), property will still pass on their deaths under the terms of any will and, commonly, one spouse will have bequeathed a substantial part of his or her estate to the other.
Separation – No Will
Where no will has been made, the rules on intestacy will apply and a large part of the intestate’s estate will pass to the surviving spouse including all personal belongings. A separated spouse may therefore inherit most of the deceased’s assets unless action is taken at the time of separation to reverse the position by executing a new will or a codicil to the existing one.
Post Divorce – Will written
Under the current law, a divorced spouse will be treated as if he or she predeceased the deceased person on the date of the divorce for all purposes. A gift in a Will to a former spouse will therefore lapse on divorce. This may possibly disinherit the children of a former marriage. Similarly, the appointment of a former spouse as executor and trustee will be void unless the will provides otherwise.
If there is a wish to leave property to a former spouse, it should be borne in mind that the spouse exemption does not apply to divorced spouses and such a gift may therefore be liable to inheritance tax.
Following the divorce, either or both former spouses may marry a new partner. Marriage revokes a will unless the will was made in contemplation of the new marriage. Similarly, the children of a new partner will have no rights under intestacy. However, if the children of a new partner are adopted, they will then rank equally with the children of the former marriage. This may well be in accordance with the wishes of those immediately concerned, but if other people, such as grandparents, have left property to `the children of X’ this will equally also include the adopted children.
Post Divorce – No Will
Where no Will has been made and there are children of minority age involved it is not uncommon for a situation to develop where the assets of the deceased pass into trust for their benefit wholly but are within the control of the former spouse (as the legal guardian of the children). They are then in control of the trust and can appoint trustees (their new partner?) should they wish and will have to make the arrangements for the funeral.
So don’t delay seriously think about getting a Will written today. For more information, contact us on 0800 092 1229 or by email advice@thedivorceifa.co.uk
The Financial Services Authority does not regulate Will Writing.
Tags: Civil Partnership, Death, Divorce, Estate, Executor, Funeral, Intestate, Legal guardian, Marriage, Pre divorce, Property, Separation, Spouse, Will, Wills | Posted in Wills |
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