Pension advice......

[Akrotiri1]

I got divorced in 2015. All assets were divided 50/50, including 2 pensions that my ex accrued whilst working in the city in the 90's.

The smaller pension, a city/banking specific is due to mature this October, when he is 50.

I have asked my ex husband on numerous occasions if I would be able to have access to this pension also from Oct, and am I able to draw down on this pension - on each occasion he said yes. He plans to pay off the remainder of his mortgage and we hope to buy a small field for our horses so we no longer have to rely on livery. (The other larger pension would then be kept as a 'pension'.....)

A month ago he spoke to the company who hold the pension and started proceedings to access it - he told me the pension has been moved into a holding account until maturity. Again, I asked him would we have access and be able to draw down once matured and he assured me yes.

In the meantime we have negotiated on a small plot of land and had an offer accepted, and have started legal proceedings. We have enough savings to buy the land, but the plan is to replace the money with my half of this pension, as wipes out our savings otherwise.

All was going well, or so I thought until I had a call from my ex DH yesterday, saying that because of the unusual nature of this pension, the only way to have access from it in Oct is to draw down the whole lot - but as he is in the higher tax bracket he would lose 40% tax on it! To avoid this, the only option is to transfer into a SIP, but means it could not be touched until either of us is 55yrs.

So basically he is refusing to draw down on it now and give me my 50% now, because of tax implications for HIM (I work p/t and earn under the tax threshold so am in a better situation).

Although I totally agree with him that it would be madness to lose so much in tax, all our financial planning and the purchase of the field were all reliant on this money coming in, and now we have committed our nest egg to a purchase we wouldn't have otherwise have spent. So am very frustrated with the situation, especially as he has reassured me on several occasions that this money would be available. He also said back in august that he wanted to draw the lot down, regardless of any tax implications, so very cross that he is going back on his word.

So a bit of a wwyd? Legally do I have a leg to stand on? Or could I ask him to 'buy' me out of this pension?

Thanks

If you haven't exchanged contracts on the field then pull out now. The tax charge has been in place for a few years so he should have known about it.

Sorry. Not what you wanted to hear.

Don't worry, he was an unreliable arse when I was married to him too, so shouldn't be suprised really.......!

What does your Pension Sharing Order say, that was issued with your Consent Order in 2015?

I am not a lawyer, but my recollection is that you have a limited time after the PSO in which to action it.

I also divorced in 2015, and by then it was considered quite unusual for an order to leave the pension in place to be split only on drawdown. That’s called a Pension Attachment Order. What usually happens with a PSO, is that your share of the pension is withdrawn and deposited in a pension entirely of your own - making it a tidally clean break.

I find it very hard to believe that your XH has any kind of history in the city/banking and didn’t know that he could just take his pension aged 50.

Are you sure it’s a pension? Odd that you talk of maturing.

If you have a PSO, then your 50% of this sum would be moved to your pension. You would then be taxed at your applicable rate on it. However - you still wouldn’t be able to access it until 55. Not 50 paying more tax - but not at all.

Legally, your best bet is to go back to your Consent Order - because I have a sneaking suspicion that you don’t actually know what you’ve got 😕

*couldn’t just take

Agree this sounds really odd, when my mum and dad split my mum was given her share to put into her own pension not left in my dads

Looking back at your OP, your XH is 49, right? That makes his State Retirement Age 67. The rules around pension drawdown that introduced the age of 55, were introduced when SRA was 65. 55 was a deliberate “SRA minus 10 years.” There was a white paper at the time that proposed to tie that “SRA minus 10”, so that if your SRA was 67, then your private pensions were accessible at 57. The necessary legislation hasn’t been enacted yet, but it’s widely publicised and the government confirmed in a parliamentary question only a few weeks back that that was still their intention. So I wouldn’t be planning around 55 if I were you! (I personally think that there may be a grace period because of the delay in enacting the intention - but I’d still plan on 57)

Scratch that - sorry, I should have googled first. 57 will come in 2028, so your husband will just make it under the 55 rule. You might not though, if you’re a couple of years younger.

Is this money actually a pension?
Do you have a PSA or PSO?

*PAO or PSO

I know this isn’t what you asked, @Akrotiri1 but the more I think about this, the more worried I am for you! So apologies if I’m overstepping!

Leaving aside this smaller pension, you’re due 50% of the larger one too, right?

Again - PAO or PSO? If the latter you’d have it in your name already. If the former... well, by 2015 they weren’t that usual. They don’t allow a clean break and freedom of investment for you. But really importantly - there are many risks:

• he decides to retire much later than you want to (you have no choice and can’t take your share until he does)
• he decides to retire earlier, taking a reduced sum over a longer period as a result - you’re forced into that reduction that might not suit you
• if he dies, it’s possible that you lose the lot!

There are good reasons why PSO took over mostly from PAO!

I would make sure you know exactly what you’ve agreed to, and talk to a solicitor ASAP about any grounds for a variation order. Do you have a copy of your Consent Order?

Also - again, sorry - I’m on a roll now! Apologies if I’m teaching you to suck eggs 😊 but a couple of other thoughts...

• are you aware that if you do take some of this first pension (now or in 5 years), you will trigger a rule that significantly limits how much you can pay into a pension yourself? Something to consider.

• the same point for your XH. You say he’s a 40% tax payer. In that case, there’s a good chance that he’s in a job with good pension scheme now, or he’s maximising tax relief into a private pension (the 40% relief is very favourable!) In which case, he may get to age 55 and realise it’s a bad idea to drawdown his first pension, triggering the restriction to further pension saving. Which (if you have a PAO) leaves you hanging. Given that he seems not to have realised at the literal last minute that he can’t just take his first pension at 50, I wouldn’t have any confidence in him having understood the implications.

You really need to read your court orders!

Thank you Cocomarine and you have been very helpful!

The larger pension is defintely a PSO, all the paperwork and admin has been done and separate accounts set up, so have relative confidence in that one.

I am also aware of the law change re drawdown age, and yes he will still be able to get his at 55 if he wants but I won't (48 currently).

The other 'pension' is a very unusual one and have been told very specific and tailored to the city, hence being available at 50. Sorry if 'matured' is the wrong term.......my ex has allegedly tried to get advice on it but even pension advisors seem confused.

All he has been told by 'Citigroup' is that he can either take the whole lot now and pay the extra tax, or put it in a sip and take it at 55yrs - with this one the assumption was that he would take it down in his name and split it with me 50/50.

I am in the process of trying to get more advice........

I am so glad you have the PSO for the second, bigger, one - when you said he could be an arse, I was worried for you!!

Do you know the forum section on MoneySavingExpert? There’s a pensions board with is full of experts. I don’t think there’s a magic wand to get the money early, but if it’s just background info on how that weird one works, I’m always impressed by how much knowledge there is on that board!