Following the pension reforms which came into force in April 2015, divorcees with Pension Earmarking Orders are being advised to act now in order to protect their future benefits.
Pension Earmarking Orders
Pension Earmarking Orders provide a fixed percentage of a pension income in retirement for former spouses.
However, the pension reforms, which allow people to take their pension as a cash lump sum rather than as an income, have an unintended consequence for divorcees with Pension Earmarking Orders, as if their ex-spouse decides to take their pension as a cash lump sum rather than an income then they may not receive their correct entitlement.
Immediate steps should therefore be taken to check the Order carefully to ensure that where you have a right to a percentage of the retirement income, you are protected and receive the same benefit if your ex-spouse takes their pension money as cash instead of as an income. This is especially the case if the ex-spouse is approaching retirement age.
If the wording on the Earmarking Order does not protect you from this, it is recommended that you seek advice to ascertain whether an amendment to the Order can be made to ensure that you receive your entitlement.
A number of people set up Pension Earmarking Orders when they first became possible around 20 years ago, before pension sharing became available.
How can Nelsons help?
If you need advice on divorce, financial settlements or any other family law matter, please contact a member of our expert Family Law team on 0800 024 1976 or via our online form. Our team will be happy to discuss your circumstances in more detail and give you information about the services that our team can provide.