Retiring during divorce proceedings

[whoknowsyou]

I'm hoping someone can advise regarding what happens if one spouse decides to retire early during divorce proceedings.

Does this mean that their CETV pension value is no longer counted in when adding up the joint assets of both spouses to be split between them ?

I've got little experience but wanted to post as it can be very complex depending on th sort and amount of pension(s).

You definitely need some specialist advice. Go and see a solicitor. They may have an accountant, financial advisor they use.

The CETV is still counted in so the value of the pension will be taken into account in negotiating the split of marital assets. If the spouse considering retiring early has the higher value pension then pension sharing is still an option, although if they've taken advantage of the 25% tax free lump sum that will reduce flexibility. It is also possible for the spouse who thinks the OH is likely to do this without good cause (eg sudden and unexpected redundancy with no prospect of further employment, onset of serious health issues which prevent them from working) to prevent this from happening by seeking a legally binding assurance (called an undertaking) from the OH that they will not withdraw their pension until financial matters are fully resolved . That way, if the OH then does try to do anything untoward with their pension steps to enforce the assurance they have provided can be taken. It is also prudent to ensure that the relevant pension company is served with formal notice of the divorce and the potential for pension orders to be made. This is something a solicitor would need to do - it effectively puts a brake on the OH drawing down on their pension during proceedings.

thank you so much**@adiudicium**

@adiudicium

Even then I guess it won't stop a spouse taking early retirement immediately after divorce in order to minimise the child maintenance payments ?

A pension before it's taken has a value, which may be based on its CETV.

A pension once taken is partly a lump sum and an income, and hence subject to those kind of provisions.

And of course child maintenance is based on income, so choosing to work less will affect that, though of course the pension would count as income. Though CM is based on income from the previous tax year, so would take a little while to work through the system.

If divorce takes place after retirement, then the value of the defined contribution pension that is split is the income rather than an asset. So instead of splitting a pension of say £100k, 50:50 or what ever, the income say £5000 a year is split, with each getting £2500 a year?
What happens if the pension holder dies? Do the pension payments stop or does it carry on for the surviving ex-spouse?

Drives me mad that the answer is always 'pay a specialist for advice'- when you've got no money to do that, its such a gamble.

My STBXH is getting a pension and working. He said he has been given a CETV relating to the pension but sounds like that might not be true? If once it's being paid, its dealt with differently?

I have 2 pensions, one I am already receiving and one I am paying into as I'm still working. When I asked both for a CETV the pension I am receiving said it would cost over £1000 to do this as I was already receiving it. The pension I am still paying into said OK but asked the reason as they will only supply the info for reasons such as divorce.

@1ranksenior

I have 2 pensions, one I am already receiving and one I am paying into as I'm still working. When I asked both for a CETV the pension I am receiving said it would cost over £1000 to do this as I was already receiving it. The pension I am still paying into said OK but asked the reason as they will only supply the info for reasons such as divorce.

Over £1k just to even tell you?! About your own money! How frustrating.

It is also prudent to ensure that the relevant pension company is served with formal notice of the divorce and the potential for pension orders to be made. This is something a solicitor would need to do - it effectively puts a brake on the OH drawing down on their pension during proceedings

@adiudicium please can you point to the relevant legislation governing this because I’ve worked in pensions for many years and this is news to me

MoiraNotRuby quite! I'm not the one that wants to split up, my solicitors have told me to wait until he initiates divorce before I spend that kind of money. So I'm looking at potential properties and I don't know how much money I will have!

For pensions in payment it's unfortunately acceptable for the pension provider to charge for a CETV (anything up to £1k is the norm). For pensions not in payment you can ask for one free CETV per annum. This is because the first calculation is of no potential benefit to the provider as you cannot transfer your own pension already in payment. It is an exercise only normally undertaken for divorce purposes, whereas the holder of a pension not in payment may transfer it to another scheme/provider. This is particularly attractive to pension trustees where DB pensions are concerned as they are looking to offload a very expensive commitment. To AuntieJoyce - solicitors may advise their client to consider doing this during proceedings, particularly if the other party has the larger pension/is over 55/may be known to be considering drawing on the pension. I'm not sure where specific legislation is, but I was advised by an experienced family law solicitor that they could issue such a letter to the pension provider to effectively "freeze" any action to draw down on pension during proceedings. Other solicitors' websites also mention this option. So it seems to be perfectly legal and permissible.

Useful article here:
www.bdbpitmans.com/insights/what-can-you-do-with-a-pension-on-divorce/

@adiudicium thank you for that link but I’m fairly certain that without a court order or authority from the policy owner then the owner can drawdown vest etc with impunity