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 11th, 2011
Sometimes I am staggered by the enquiries I receive and the lack of knowledge and understanding shown by the pension trustees and companies involved in divorce towards the spouse. This one involved the Local Government Pension Scheme and highlights what can happen when the information provided to the ex-spouse is incorrect.
“I have a share of my ex-husband’s LGPS pension which I am very grateful for. He will receive his pension at 60 – 3 months before my 60th birthday. Although I have received (incorrectly as it now seems)information for 6 + years stating that I would receive my “share” at 60, I have now been told that the scheme only pays out at 65 unless I take a substantial reduction. If we had still been together this money would have all been paid at my ex’s 60th. I am only able to work part-time due to health issues. I am 54 now and struggling somewhat. I will have to take my pension at 60 regardless. I have no other income. Is there anything at all I can do? It seems so strange that something meant to even out financial situations should discriminate so much. Thank you for your time.”
This issue has a name – income gap syndrome – and it refers to the fact that the existing member will receive his pension benefits at age 60 but the pension credit member cannot access her pension on the same terms until age 65. She has to take a reduction to draw it at 60. Therefore, there is a gap which should be bridged. However, it was too late to go back as the pension sharing order had been implemented and she confirmed:
“I will take the pension credit at a reduced rate when I am 60. It is just so unfair that the LGPS sent me incorrect information which I based my future plans on.”
So check exactly what is being offered in terms of your pension sharing benefits and when they will be paid!
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 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 firstname.lastname@example.org
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 – email@example.com
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 firstname.lastname@example.org
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 email@example.com
Posted March 29th, 2010
Of all the things that need to be understood in the context of pensions and divorce I consider this one to be the biggest. There is a major difference between the Valuation Date and the Valuation Day and it is imperative you understand it.
In England, Wales and Northern Ireland, the date on which the transfer value request, Cash Equivalent Transfer Value (CETV) or Cash Equivalent of Benefit (CEB), is received by the trustees or scheme provider becomes the Valuation Date.
This becomes the value which all of the negotiations for your settlement will be based on. For example, if you are advised by your solicitors, having received an actuary’s report, that the pension needs to be split 60:40 this will be done on the basis of the value on the Valuation Date.
However, this is NOT the value which will be used when the final benefits are calculated. The actual value will be calculated at some point within the four month implementation period and this date becomes the Valuation Day. The implementation period starts on the Transfer Day, which is the day the pension sharing order takes effect, or, if later, on the day the pension scheme has the prescribed information needed to implement the pension sharing order.
The period of time between the Valuation Date and the Valuation Day can be considerable and a lot can change in a pension during this time, which can have knock on effect on the valuation and subsequently the benefits derived from it.
If you would like to understand more about how the Valuation Date and Valuation Day might affect you and your benefits, call or email me for a confidential chat.
firstname.lastname@example.org or 0800 092 1229