Newsletter

A new service for 2008. No long complicated explanations, you can email me for those! Just short notes covering situations about Pensions and Divorce, as I come across them.

Part 1

1. Overseas Pensions – Cannot be shared or attached but can be offset, make sure scheme is truly offshore and not an onshore approved scheme with a funny name.

2. Overseas Divorce – Whilst overseas individuals can apply for a UK pension scheme share the court proceedings must be in the UK. If you go to Welfare Reform & Pensions Act 1999 section 22 you can see that overseas divorces can be dealt with in the UK by applying for Financial Relief in UK.

3. Safeguarded Rights – Contracting out benefits when shared become known as safeguarded rights with no access to benefits until age 60 with no tax-free cash being available. Until now! If clause 78 of the 2007 Pensions Bill becomes law, safeguarded rights will disappear allowing access to both cash and early pension. Great news.

4. Pension Protection Fund Sharing – Other clauses in the 2007 Pensions Bill deal with schemes in default, covered by the Pension Protection Fund, which can now be shared. A situation I doubt many of us have yet come across but one to put in the memory banks because all previous notes will say it is not possible to share such benefits.

5. Transfer Day Post Sharing Order – A great deal of misinformation and errors surround the final valuation post divorce. The transfer day is defined in law and is 21 days following the issue of any order. See attached article for more information.

6. Issuing A Sharing Order After Divorce – Section 24b of the Matrimonial Causes Act 1973 states “On granting a Decree of Divorce ….. or at any time thereafter…….., the court may, on an application …….. make one or more pension sharing orders…….”.

As always if you have a question, please do not hesitate to email and I will hopefully provide an answer as soon as possible.

March 2008
Richard Jacobs ACII
Resolution IFA Accredited Divorce Specialist

Part 2

7. Sharing a Pension Without Members Consent – Schedule 5 of The Welfare Reform and Pensions Act 1999 states that a pension sharing order can be implemented even without the members consent. An important point I have had to mention on more than one occasion.

8. Pension Schemes Without Sufficient Liquid Assets to Satisfy Order – All pension schemes can borrow up to 50% of their value. If there are still not sufficient liquid assets, the spouse receiving the credit could become a member of the scheme until such times as assets become available.

9. Sharing a Pension in Payment – This continues to cause problems. If the pension in question is in payment it does not mean that any credit will automatically be payable as a pension. The public sector unfunded schemes have various normal retirement ages from 60 to 65. Regardless of the age of the member who is receiving their pension, the spouse with the credit might well have to wait until 65 to receive an income. In all situations where the pension is in payment, no pension commencement lump sum, the new name for tax-free cash, is payable to the receiver of the pension credit.

10. Armed Forces Pensions – There is an excellent booklet providing details of all Armed Forces Pensions available on their website . If you click the heading “Booklets relating to …..” a booklet is available entitled “Pension Benefits on Divorce.”

http://www.mod.uk/DefenceInternet/AboutDefence/WhatWeDo/Personnel/Pensions/ArmedForcesPensions/

11. Sharing State 2nd Pension – State Earning Related Pension Scheme – I have been telephoned by the Department of Work & Pensions to be reprimanded! They say their notes insist that Legislation only provides for them to provide a share of S2P, where a previous transfer value calculation has been completed. I am still to be convinced, but if you are sharing S2P, obtain a valuation on form BR20 beforehand. The DWP did confirm that valuations using BR20 are available. It is only the forecast of benefits using BR19 that are delayed.

12. State Pension Age – Every woman under age 58 and man under age 50 is having their state retirement age changed. There is an excellent Pension Scheme Retirement Age calculator available via website www.thepensionservice.gov.uk/resourcecentre/statepensioncalc.asp.

I hope this second Quickie Pension & Divorce is as interesting as the first. Both are now published on my dedicated website www.pensionsanddivorce.org under the tab newsletter.

Best wishes

Richard Jacobs ACII
Resolution Accredited IFA Divorce Specialist