Category: Pensions

What is a pension sharing order?

Since divorce pension sharing was introduced in December 2000, pensions have become part of the assets that must be considered during a divorce settlement.

Getting a divorce can be very stressful, with lots of important decisions to be made and paperwork to be filled out during what is already a very emotional time.

One of the biggest tasks that must be tackled is fairly dividing up the couple’s assets. Assets can include property, money, possessions and pensions, anything under a shared name must be considered.

Dividing up a pension
Pension sharing orders are not a compulsory part of a divorce. A pension is an important asset that should be considered during a divorce, but there are different options for dividing it up.
The three main options for dividing a pension are sharing, offsetting and earmarking. A pension sharing order offers a clean break solution.

What is a Pension Sharing Order?
If one party of a divorcing couple has no pension entitlement, then a pension sharing order can be granted by the court to give shared rights to the other party’s pension through a legal arrangement.

How is the pension split?
A pension sharing order does not always require a pension to be split 50/50.

Both party’s assets and finances should be assessed in order to determine how to fairly split the pension. If a decision cannot be reached, then it will be down to the court to decide.

Why do I need a pension sharing order?
If a couple decide that they wish to share a pension, then even if they can amicably agree the percentage split, they will still need to apply to the court for a court order.

This is because pension providers and pension schemes are not allowed to divide or transfer a pension without direction from a court.

For further help or advice with dividing a pension during divorce proceedings, speak to our team of family law specialists here at Lund Bennett by giving our team a call on 0161 927 3118.

Pension reforms may have unintended consequences for divorcees

A pension earmarking order provides an ex-spouse with a fixed percentage of the pension income. According to Old Mutual Wealth, a large financial services company, a consequence of the recent pension reforms is that any divorcee with a pension earmarking order may need to act fast to protect their benefits.

Those with the benefit of a pension earmarking order which pays them a fixed percentage of the pension income should check immediately to see if their rights are protected now that the member no longer needs to take their pension as income and can decide to withdraw all their pension as cash. If the member takes their pension as a cash lump sum, then the ex-spouse with the benefit of an earmarking order may not receive their correct entitlement.

If you are in possession of an earmarking order it is vital that the wording of an earmarking order protects individuals from this. It is important to act promptly, especially if your ex-spouse is approaching retirement age, to check that your rights are protected. It is strongly recommended that you seek legal advice to ascertain whether any amendments can be made to the order. Our specialist team can advise on financial provision and pension settlement in divorce proceedings. Consulting our specialist lawyers in our Altrincham or Manchester offices is a great first step. Please contact us on 0161 927 3118 for a free 20 minute consultation.

Pension changes 2015 – what you need to know

Pension changes are just around the corner. Under previous rules, most people retiring have often bought an annuity, which provides an income for life. However, from the start of the new tax year on 6th April 2015 those aged 55 or over will be able to access the entirety of their pension pots.

A summary of the changes are as follows:

  • People aged 55 and over can withdraw any amount from a Defined Contribution scheme subject to income tax
  • Tax changes make it easier to pass pension savings on to family members
  • Many people with Defined Benefit schemes will be allowed to transfer to Defined Contribution plans

Existing annuity holders are unaffected for the time being however it is thought that there are plans for them to be able to sell their annuity. Considering these changes it seems that there will be a greater deal of flexibility with pension dealings as there are more options available; however it is important that people take time to consider how they use these options in a way which will work for them. For example, any lump sum of cash withdrawn from a pension will be treated as income and will therefore have income tax implications. It is vital to consult a financial expert or consult the free guidance which is being offered from the government’s Pension Wise service online.

A pension in divorce and separation is very significant. After the value of the former matrimonial home, pension provision of one or both spouses may be the largest capital asset of the marriage. The court has the power to take pensions into account in dividing up the matrimonial assets and there are a variety of different methods to ‘compensate’ a former partner for their lack of pension entitlement. It is therefore important to be aware of the changes to pensions and the implications of these changes in your current situation.

For advice on your rights on pension settlement in divorce proceedings contact our specialist Family Law lawyers now on 0161 927 3118 for a free 20 minute consultation.

Extension of Civil Partnerships to Opposite Sex

The Government has announced that it will consider the extension of civil partnerships to opposite sex couples. A Parliamentary Committee that has published a report of the Same Sex Couples Marriage Bill has stated its concern that there will be potential discrimination for cohabiting opposite sex couples, in comparison to civil partnerships. Initial Government concerns were focused arround the costs related to extending the bill to same sex couples, but the report disputes these costs and is asking for clear and accurate details about such.

The Committee to keen to stress that the Government carry out a full review of pension provisions of same sex couples and civil partners to ensure that there is no discrimination arising in the pension scheme provisions.

The full report can be read here.

Divorcees need better understanding of Pension Issues

A recent study has found that 19% of women stop paying into pension funds after they divorce and 25% reduce their levels of savings. It also found that only one in six divorced women had rights to a pension through their ex-husband.

Further findings by the Phoenix Group were;

  • 66% of female divorcees over 40 rely on the state pension in retirement;
  • 38% of women have no idea what settlement they received following their divorce;
  • 20% of women have no idea about their pension provision since their divorce.

For advice on your rights on pension settlement in divorce proceedings call our specialist team now on 0845 548 1007.