The introduction of new pension freedoms have been welcomed by many, with over 55’s now granted access to their pension pot altering the way individuals can spend their pension fund. Amidst the numerous benefits, these radical reforms have the potential to cause a great deal of damage to orders made in the family courts to seek to equalise pension benefits.
Initially introduced under the Pensions Act 1995, pension earmarking orders ensured that divorced spouses were entitled to the share of their partner’s pension benefits built up by the main financial contributor. This ensured that both partners would receive a fair share of their pension, offering stability post divorce to individuals who were not employed and therefore financially dependant on the other. Many are relying on these court orders to provide for them in retirement.
Concern has been raised regarding how these freedoms will affect ex wives as they now run the risk of losing out over the sharing of the pension pot. Essentially, the pension reforms enable the ex spouse to override agreements to share the benefits accumulated by the main breadwinner throughout the course of the marriage by cashing them in leaving nothing in the scheme to pay the payments ordered. Divorcees who rely on such an arrangement must act quickly, as divorced savers now have the option to cash in their entirety of their pension. Where the divorce or separation has ended on bitter terms it is feared scorned spouses may cash in their pension in a last ditch attempt at levelling the score as they take what they believe is rightfully theirs.
The division of financial assets following divorce, particularly pensions has always been a highly complex area of law further complicated by the passing of last months reforms. It is essential those who have previously settled earmarking orders consult a specialist family law solicitor in order to review their agreements and to consider how to protect the funds held.
Here at Farleys our family law team have a wealth of expertise advising clients on the sharing of pensions, proposing practical and effective solutions tailored to your personal circumstances. For further information to regarding earmarking orders or the division of financial assets please don’t hesitate to contact us today on 0845 050 1958. Alternatively please complete an online enquiry form.