Pension reforms were introduced in April 2015 allowing those entering retirement to cash in all or part of their pensions. They have impacted not only those entering divorce proceedings now, but also couples who have been divorced for many years, creating worry for those who may now be set to miss out from arrangements entered in to years ago which they are relying on for future financial security.
Many divorced couples will have previously been subject to “earmarking orders” imposed by the Court whereby one spouse would be entitled on retirement to a percentage of their spouse’s income from a final salary pension. The pension reforms effectively deprive ex-spouse’s relying on that pension income from seeking their share, given that this share is simply now “cash” which did not form part of the previous agreement.
Whilst the majority may prefer not to take their final salary pension as cash due to the risks commonly associated with doing so, for those who may been through not-so-friendly divorce proceedings and wish to cut ties with their ex-spouse, this loophole essentially allows those individuals to deprive their ex-husbands and wives of an income they may have been relying on for a number of years.
It has yet to be announced whether this loophole will be investigated and changes made so for the time being it is important for those considering entering in to divorce and financial remedy proceedings, or those who have previously been divorced and are concerned about previous agreements entered in to, to seek legal advice and Griffin Law are on hand to assist you.