There are potentially quite a few options for people to think about if final salary or defined benefit pensions are held with respect to the workings of sharing an individual's pension within divorce proceedings.
If a Pension Sharing Order is made, the Trustee will either discharge its liability for the pension credit by transferring the credit to another approved pension arrangement. This means that your spouse/civil partner must nominate an approved arrangement to which the pension credit is transferred. Or, they're going to allow the civil partner/spouse to be a part of the scheme in their own right. This indicates that it would appear that they have built up their own benefits under the scheme.
Some important rules have to be considered. It might be the spouse or civil partner can't draw their new pension benefits until the spouse/civil partner that it transferring benefits away is sufficiently old themselves to draw their pension. This is an important consideration if there's a wide difference between the ages of the 2 individuals party to the divorce.
Additionally, if your spouse/civil partner accepts benefits in their own right in your current scheme, they would possibly not be entitled to any kind of death benefit.
Ultimately, the choice as regards whether the pension is transferred in the current scheme, or away into a new scheme is that of the individual receiving the benefit. They may feel that a rather more flexible approach may be to transfer their new pension benefits into a personal pension scheme of their choice, if the pension has not yet been crystallised, or an annuity to the pension is in payment and therefore post retirement.
It is suggested that your spouse or civil partner takes specialist finance advice prior to making any decision about a transfer of the pension credit. The selection of a financial consultant is an individual decision and the Pension Fund Trustee cannot make any recommendation. But it is important that your spouse or civil partner obtains financial advice from an independent adviser.
If a Pension Sharing Order is made, the Trustee will either discharge its liability for the pension credit by transferring the credit to another approved pension arrangement. This means that your spouse/civil partner must nominate an approved arrangement to which the pension credit is transferred. Or, they're going to allow the civil partner/spouse to be a part of the scheme in their own right. This indicates that it would appear that they have built up their own benefits under the scheme.
Some important rules have to be considered. It might be the spouse or civil partner can't draw their new pension benefits until the spouse/civil partner that it transferring benefits away is sufficiently old themselves to draw their pension. This is an important consideration if there's a wide difference between the ages of the 2 individuals party to the divorce.
Additionally, if your spouse/civil partner accepts benefits in their own right in your current scheme, they would possibly not be entitled to any kind of death benefit.
Ultimately, the choice as regards whether the pension is transferred in the current scheme, or away into a new scheme is that of the individual receiving the benefit. They may feel that a rather more flexible approach may be to transfer their new pension benefits into a personal pension scheme of their choice, if the pension has not yet been crystallised, or an annuity to the pension is in payment and therefore post retirement.
It is suggested that your spouse or civil partner takes specialist finance advice prior to making any decision about a transfer of the pension credit. The selection of a financial consultant is an individual decision and the Pension Fund Trustee cannot make any recommendation. But it is important that your spouse or civil partner obtains financial advice from an independent adviser.
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Information thanks to Adviser Hub. If you want to know more about the subject of 'divorce and pension' or need assistance with your pension valuation it is a good idea to seek advice from a qualified pensions adviser.
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