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Early retirement and pension attachment orders

  • hueligan
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04 Sep 12 #353833 by hueligan
Topic started by hueligan
Hello everybody I would greatly appreciate some advice. Following my divorce in 2010 my ex took me to court for a pension attachment order in October 2010. We came to an agreement that upon retirement I would convert the maximum amount (25%) to a lump sum and she would then receive 59% of that amount. The Consent Order was then issued. She had asked for £70,000 but the pension provider would only apparently accept it as a percentage so 59% roughly equated to £70K of the projected maximum lump sum of £120K. In May 2011 the government changed the way that the lump sum is calculated which means that now 59% of 25% of my pension is £90K!! The court order states that once I have complied with it all other claims are dismissed (not that there are any other claims at the moment). My questions in relation to this are:-
1. Can I insist that my pension provider use the commutation calculator that was in place in October 2010 when the order was made?
2. If I can''t do this then what will happen if I try to convert less than 25% of my pension so that 59% of the resulting lump sum comes to £70K?
3. Will the pension provider tell the court that they have been unable to comply with the order because I didn''t convert the full 25% and will they start paying me my pension regardless of the unsuccessful order?
4. Would my failure to convert the full 25% mean that my ex could go back to court and make new claims for periodic payments, lump sums etc?

The second issue is that I am considering taking early retirement. However, if I do so I am not entitled to convert 25% of my pension to a lump sum. The maximum I can convert is 2.25 times my gross annual pension which equates to approximately 10% or £53K. The court order does not say that I cannot take early retirement but it does say that I have to convert 25% of my pension, which I am only entitled to do if I go to full term.
I have similar questions to the last set:-
1. If I take early retirement will this open the door for my ex to take me back to court as the order cannot be complied with as it stands?
2. Will my pension provider allow me to retire early and start paying me my pension when they have been unable to comply with the order or will they lock it down pending the issue of a new order?
3. If they do start paying me my pension am I correct in thinking that no pension sharing order can be applied to it once it is in payment and that my ex would have to apply to the court for me to be ordered to make periodic or lump sum payments directly to her?

  • maggie
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05 Sep 12 #353954 by maggie
Reply from maggie
Pension schemes are bound to do exactly what the court order tells them to - when you take your lump sum they''ll commute according to current rules and re-allocate the % required by the order regardless of the amount.The pension scheme will not be made aware in the order of the cash amount agreed.
Translating the intended cash amount into a percentage is done for all pension orders [except in Scotland???] to make it easy for schemes to implement but that ease of operation for them carries the risk that the original cash intention is not matched.

Is this a final salary pension?

  • ian conlon actuary
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10 Sep 12 #354898 by ian conlon actuary
Reply from ian conlon actuary
Your case highlights some of the problems with Attachment Orders. Firstly, pension scheme trustees are obliged to administer the scheme in accordance with the scheme rules and over riding legislation.
1)The scheme will use the terms applicable now, not those applicable at the time the Attachment Order was made.
2)If the Order specifies that you convert 25% of your pension to cash and that 59% of this goes to your ex then this is what has to happen unless it contravenes scheme rules or HMRC limits.
3) I wouldn''t like to speculate as to what the scheme would do. What you state is what I think that they should do.
4)You need to check this with a solicitor

The position is much less clear if on early retirement you cannot commute 25% even if you wanted to. I don''t think that the scheme would want to make any payments to you whilst there remains uncertainty as to what must be paid in respect of the Attachment Order.
A Pension Sharing Order can be applied to a pension in payment but not to a pension which has had an Attachment Order applied to it.

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