Lump sum from ex DH pension

[bigbirdandemu]

NC as outing if linked to other posts.
In our consent order it states that my ex Dh has to give me £25k of his pension share. I assumed I would get this as a lump sum, a friend is now saying that this can ONLY be transferred into a pension for me & there is no cash lump sum. I'm sure I was told I could get the amount as a lump sum once the house is sold, as per the consent order ?

If I get a cash lump sum, will I have to pay tax on this ? will it be classed as income for me ? it's sitting in ex DH pension pot, as untaxed earnings, so presumably someone is going to have to pay the tax on this ?

Grateful for advice plse.

Are you of an age where you can take the pension? If not I believe it goes into a pot for you until you reach the appropriate age.

Thanks @DustyLee123 I am 42, so not reached pensionable age yet.

It would be a pension credit to you. Depends on provider and your other pensions but it can sometimes be kept where it is or transferred into another pension scheme (be worth getting some financial advice).

@HollyBollyBooBoo is it 100% definite that is not a cash lump sum ? just need to confirm, currently making longer term financial plans.

I must admit, I did wonder how it could be a cash lump sum as I am not at pensionable age, there are so many rules & regs around taking a lump sum from a pension/taking a pension early and to simply hand me over £25k from a pension pot in cash & untaxed did seem a bit too hopeful

Be worth asking your solicitor as I'm not an expert but from my limited knowledge I've don't believe you get cash out of a pension at your age during a divorce.

@HollyBollyBooBoo thank you

No, you can’t take it until the pension says you can. I think it’s moved up to 57 now, but it depends on the provider.

You won't get a lump sum. His pension company will be given a court order to transfer it to your pension company and if you don't have one you have to open one. You can't access pension until 55 but it's going to be 57 from April. You could try to trade it with him against equity in your home if he's agreeable.

You would have had the option of taking more money from other assets in return for giving up a claim on the pension. You would have got that money immediately - that might be where the confusion has arisen.

It will be a pension transfer into a pension pot of your choosing- not a cash lump sum now

I’ve done a lot of research into this.

if you pension share then it’s basically 50/50(or whatever you agree).

if one partner wants the pension money in cash the you are looking at around 50% of the value.

reasons for this include many facts but basically ask yourself the following question: Would you rather have £25k in tax free cash today or £25k in 20 (years to retirement) and then be taxed on it as income as well?

same amount, different “value”.

Of recent note I’ve worked out that to split my pension 50/50 with my spouse means I would have to move £160k from my pension to hers.
she wants the cash and I’ve offered her £100k she doesn’t understand things and is now asking for £175k! IN CASH!

to get things moving I’ve gone to £150k which means I will have to remortgage that amount over the next 15 years and hence will cost me £216k

to replace £160k in my pension will cost me £110k in taxable income.

so effectively she is getting over £100k more than she is entitled to.

She still thinks I’m trying to rip her off so looks like it’s going to court. You can’t win with some people!

Is the only way to get a cash equivalent now, from an ex partners pension share, to offset against assets ?
Is there no option to have the pension share as a lump sum, before my retirement age ?

As far as I'm aware, no. An amount cannot be withdrawn from his pension and given to you as a lump sum.
You would need to agree, or as the court, to allow you have greater liquid assets in exchange for no/less of a pension share.

Logically the options would be

can the pension provider transfer 25k into a pension scheme to you

or you get 25k cash to keep your hand off his pension pot

at 42 don’t think you can withdraw cash from pension

If the £25k pension transfers to you now it will continue to grow.

Are you selling a house? If so he could give you more of the equity now and you leave the pension.

If you need the cash now (for a house for example) I would offer to take £15k cash or £25k pension.

of you want to invest in a pension at a later date you will get tax relief at you nominal rate. So to get 25k in a pension will only cost 17-20k depending on your tax rate.

@bigbirdandemu it depends on your partners age. I have just divorced, ex had a pension which he could choose to take a lump sum from at the age of 52.

He took the lump sum and bought me out of the house with it. It depends on the rules of the pension i believe

My ex and I have agreed a lump sum amount which is a less amount than is in the consent order following divorce. I explained this to Solicitors but they said we have to adhere to the consent order even though we both agree the revised amount. Why won’t the court accept our mutually agreed amount. It seems odd that if we disagree with the consent order, we will have to pay more legal fees ?

https://www.sharingpensions.co.uk/yourques6.htm
Useful resource.
@bigbirdandemu
The amount of pension to be transferred should be expressed as a percentage of the cash equivalent transfer value (CETV) and not as a specific lump sum (except in Scotland)

"The pension debit against the scheme members pension rights must be specified as a percentage in the pension sharing order made by the court or as a result of agreement between the parties and is documented in the pension sharing annex.

If the court order is determined in terms of a specific amount rather than a percentage, then the pension debit will be made as the percentage this amount represents"
sharingpensions.co.uk

You could ask for a lump sum of £25k instead of a pension of £25k.

He has to have the cash in order to give it to you though of course. Does he have £25k to give you? If not, as pps have said, it's got to go into a pension.

That £25k in a pension could easily be £50k+ by age 57, much more if you can afford to add to it, just so you can weigh up your options.
If you need the cash now then the obvious answer is for you to take an extra £25k in equity, if there’s sufficient cash for you to do that of course.

If you take a cash sum now instead it’s likely to be less than 25k not more based on the fact it’s a liquid asset