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 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 email@example.com
Posted August 9th, 2010
An issue to be aware of when considering ill health in divorce matters, is its potential impact on pension asset values.
It can reasonably be argued that based on longevity a pension asset in the hands of someone with a shorter life expectancy has less value than it would in the possession of someone with an average life expectancy. It is anticipated that the pension income will be paid out for a shorter period of time.
In a divorce, it would seem an appropriate approach to look at pension sharing and perhaps consider a greater proportion of the pension be shared with the spouse who is in good health. This may enable the spouse in poor health to retain more non pension asset (which could die with them) and pass this wealth down through their family. For completeness, a review of the death benefits available should also be undertaken.
For more information on this and how life expectancy affects pension valuations and other aspects of your finances on divorce, please contact us on 0800 092 1229 or email firstname.lastname@example.org
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, email@example.com
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 firstname.lastname@example.org
The Financial Services Authority does not regulate Will Writing.