Posts Tagged ‘what happens to pension on divorce’

Pension Transfer Advice

Wednesday, August 29th, 2012

Pension Transfer Advice

Pension transfer advice, for the pot that you have accrued.  Most people switch jobs several times during their working life.  When you change employers, it is worth thinking about, combining your pensions into one pot.  It is easier to keep an eye on fund performance if your pensions are all under one umbrella.  A single pension pot will incur less paperwork and administration, and could also generate lower costs and better overall performance.  Sounds like a no-brainer?  In theory yes, however, there are some important issues to consider before taking the plunge seek independent Pension Transfer Advice.

Occpational Pension Schemes

Most occupational pension schemes and private schemes can be transferred, but there are restrictions and potential pitfalls.  It is not usually worth transferring final-salary or public-sector pension schemes the benefits are too good to lose.  You should only transfer if you have actually left a company.  If your current employer contributes to your existing occupational pension scheme, you should not switch.  Also it is worth noting that the money in your pension can only be transferred from one pension scheme to another (until you have retired), and not every new pension scheme accepts inward transfers.

Small Pension Pots

If your pension pot is very small, it may not be worthwhile switching: you will have to pay charges when you transfer, and some providers impose harsh penalties if you leave their scheme.  And, if you are relatively close to retirement, you might not have sufficient time to recover the costs incurred by transferring.

According to the Pensions Advisory Service, the Department of Work & Pensions (DWP) is set to publish a consultation paper examining the consolidation of small pension pots.  Possible approaches could see your pension pot moving with you when you change your employer; alternatively, when you change your job, your pension pot could be left behind and – unless you decide to opt out – the cash would automatically be transferred to a central aggregator fund.  The DWP believes the changes would increase the visibility of pensions saving: instead of seeing several small figures, each individual would be able to view one larger, consolidated figure.

Transferring and aggregating your pension pots might generate significant long-term benefits; however, any decision to do so should be taken for the right reasons.  Tread carefully and, above all, take expert advice before making an irreversible decision.  For Pension Transfer Advice contact Maxim Wealth Management  who are well-placed to help you with this.

Pension sharing on divorce Scotland

Thursday, September 15th, 2011

Pension Sharing on Divorce Scotland

To achieve your fair share of pension rights and a clean break you will need expert legal and financial advice, especially where divorce is taking place between older couples and a considerable pension fund built up over the life of the marriage.

The allocation of pension rights on divorce is a particularly sensitive issue mainly because women are likely to have much smaller pension pots than men.  This is usually for two main reasons – women on average earn less than men and they are more likely to have spent time out of the workplace raising children.  In the event of a divorce, it is as important to consider the fair split of pension provision as it is the division of any other assets.  If one spouse has no pension savings because they have stayed off work to support either house or family, while the other has worked and built a substantial fund, this should be taken into account when determining the settlement.

Pension Sharing

When pensions are to be shared, you may not actually split the pension fund itself but instead, offset your rights to it against the value of something else – perhaps some investments, business assets or even the marital home.  Where young children are involved, for example, the marital home may be a precious asset which will reduce upheaval in the short term.  However, the benefits of this need to be weighted against those more formally related to retirement.

If a longer term solution for pension assets is required, there are a number of available options. The first might be to earmark a portion of your ex-spouse’s pension fund, and defer receipt of that benefit until they retire.  However, such earmarking leaves one partner dependent on the other, reducing the chances of a clean break.  They may also have to wait years before benefiting – and, if your ex-spouse dies before retirement, it is possible you could end up with no formal pension provision at all.

To protect against such eventualities, it is now possible to split a pension at the time of divorce.  A dependent ex-spouse gains access to a specific portion of the main breadwinner’s pension fund which then allows them to move their share away and make a much “cleaner” break. Both parties can then move on and take full control over their own share. In addition, if the main pension holder dies or remarries, all pension rights for the ex-partner remain protected.

The allocation of pensions on divorce requires expert legal and financial advice to achieve a fair split for both parties.  If you could benefit from talking to our financial advisers on this matter please call 0141 764 0040 in complete confidence.  Contact Us.

© 2018 Maxim Wealth Management. Web Design Glasgow Adeo Group