A well respected, award winning social enterprise
Volunteer run - Government and charity funded
We help 50,000 people a year through divorce

01202 805020

Lines open: Monday to Friday 9am-5pm
Call for FREE expert advice & service info


What are we each entitled to in our divorce settlement?

What does the law say about how to split the house, how to share pensions and other assets, and how much maintenance is payable.

What steps can we take to reach a fair agreement?

The four basic steps to reaching an agreement on divorce finances are: disclosure, getting advice, negotiating and implementing a Consent Order.

What is a Consent Order and why do we need one?

A Consent Order is a legally binding document that finalises a divorcing couple's agreement on property, pensions and other assets.


Do you need help sorting out a fair financial settlement?

Our consultant service offers expert advice and support to help you reach agreement on a fair financial settlement quickly, and for less than a quarter of the cost of using a traditional high street solicitor.


Forced External Pension Share

  • ian conlon actuary
  • ian conlon actuary's Avatar Posted by
  • Platinum Member
  • Platinum Member
More
15 Oct 12 #361016 by ian conlon actuary
Topic started by ian conlon actuary
My view is that it is a financial scandal that pension schemes can force Pension Credit members to transfer the proceeds of a pension share externally. Whilst the practice is permitted in law, pension scheme trustees are required to act in the best interests of scheme beneficiaries, I do not believe that they are.
I have been in communication with the Pensions Regulator for quite some time, trying to get them to look into the matter. Before they investigate, they want evidence of the practice, I provided them with a list of some 50 schemes which adopt this approach. They are now looking for documentary evidence, such as statements or letters from the trustees which sets out their policy.
If anyone has any such evidence, I would be grateful if yo could forward this to Sarah Dove at the Pensions Reglator - This email address is being protected from spambots. You need JavaScript enabled to view it.
In order to ensure that she knows what it''s about state that it is in relation to pension scheme trustee practice of insisting that Pension Credit benefits are transferred externally as raised by Ian Conlon
Any queries, drop me an email.
Thanks
Ian

  • maggie
  • maggie's Avatar
  • Platinum Member
  • Platinum Member
More
16 Oct 12 #361316 by maggie
Reply from maggie
I just want to say how grateful I am to Ian for taking up this cause on behalf of people sharing a defined benefit pension on divorce and whose only option is to transfer out.
I don''t know of anyone - me included- who''s shared a private final salary/defined benefit pension who has been allowed to keep their share in the defined benefit scheme to get a guaranteed income on retirement.
Why are defined benefit pension schemes allowed to force pension credit holders to transfer out - severely reducing the value of the pension asset - and should it be allowed to continue?
I think anyone who''s shared a defined benefit pension - including the original member whose pension was split - will have been horrified when they eventually see what damage has been done to their pension asset by the pension credit holder being forced to transfer out.
I hope if we can provide real life examples to show the Regulator what damage being forced out does and how unfair it is - maybe things will change for the better.

  • ian conlon actuary
  • ian conlon actuary's Avatar Posted by
  • Platinum Member
  • Platinum Member
More
16 Oct 12 #361325 by ian conlon actuary
Reply from ian conlon actuary
I just noticed that the email address I provided for Sarah Dove doesn''t appear for some reason. If anyone wishes to email information to her please drop me an email and I will provide her email address.
Ian

  • The Divorce IFA
  • The Divorce IFA's Avatar
  • Platinum Member
  • Platinum Member
More
19 Oct 12 #361820 by The Divorce IFA
Reply from The Divorce IFA
I agree this is a massive issue.

I see first hand the implications of pension sharing being done on the cheap or poorly and the outcomes can be frightening.

When pension sharing is done correctly, with the involvement of professionals to some extent some of these issues can be mitigated.

Admittedly you cannot deny that when the risk is passed to the individual rather than remaining with the trustees the potential for a poor outcome is high. If annuity rates keep falling then it is investment returns which need to work overtime.

In my experience, most clients coming out of divorce are risk adverse and don''t have the skill sets to manage these dual risks effectively.

From a corporate prospective Ian wouldn''t you always be advising the trustees to rid themselves of the risk.

It should be remembered that their scheme assumptions have been based on the current and assumed future membership of their scheme rather than on the potential for new pension credit members to be added as the result of divorce.

How actuarially could this be accounted for and reasonably incorporated into a schemes assumptions for now and the future. Aren''t they dealing with enough issues already - equity returns, longevity,falling gilt yields, etc - without having factor this in with the associated issue of part of the pension becoming payable to a member of the opposite sex!

This aside I agree it would make life easier for the pension sharing process if full internal transfers were the only choice. It is becoming the norm now when I check with a private scheme that it is an external transfer only.

So like a turkey voting for Christmas I wish you well with your campaign.

Phil

  • maggie
  • maggie's Avatar
  • Platinum Member
  • Platinum Member
More
19 Oct 12 #361827 by maggie
Reply from maggie
The legislation, the SI regs and the official court forms seem to totally ignore the difference between defined contribution and defined benefit pensions - it all looks designed as the ideal get out for private defined benefit pension schemes - how difficult would it be to legislate for a defined benefit scheme to take the existing liability for the member and adjust it to give an ex-spouse of a different age/gender a pension promise/guaranteed income?

PS Why are public sector defined benefit pensions so keen on keeping pension credits within their schemes?
Do public sector pensions also make on the deal because the loss crystallised within the CETV is preserved within the pension credit member''s eventual income/fewer benefits/the pension in payment income gap?
Is pension sharing providing a windfall profit for defined benefit pensions at the expense of the pension credit holder?

If defined benefit pensions are reaping rewards from pension sharers why are they charging so much for sharing?

  • ian conlon actuary
  • ian conlon actuary's Avatar Posted by
  • Platinum Member
  • Platinum Member
More
19 Oct 12 #361839 by ian conlon actuary
Reply from ian conlon actuary
Phil, the main issue is that trustees are required to act in the best interests of the scheme beneficiaries, not to manage down the liabilities on behalf of the trustees (at least that''s my view and one shared by a respected indpendent professional trustee).
There is much greater distinction now between advice to scheme trustees and advice to the sponsoring employer.
On the issue of advising on reducing risk, yes this is a big issue, but from a trustee perspective the focus should be on reducing investment risk and risks associated with the employer.
The Regulator has issued specific guidance to trustees on their duties where the employer is seeking to carryout an exercise to encourage members to transfer out by way of financial enducements (i.e. CETV + top up or cash). In this circumstance, the Regulator has stated that the trustees should assume a default position that the option is not normally in member''s best interests. Treatment of Pension Credit members is entirely inconsistent with this approach.
Sorry for rambling on.
Ian

  • maggie
  • maggie's Avatar
  • Platinum Member
  • Platinum Member
More
24 Oct 12 #362673 by maggie
Reply from maggie
I''ve written to the Pensions Regulator outlining what happened in my case and offering the relevant documents.
This response came from Sarah Dove :
"Thank you for your email, the contents of which have been noted. Should we require any further information in relation to this we will contact you"

I found this in the 2008 CETV consultation report
www.thepensionsregulator.gov.uk/docs/tra...sultation-report.pdf

"4.2.2 pension sharing on Divorce
There were a number of responses on pension sharing on divorce. While we have
considered these responses in the context of this guidance, the focus of this
guidance is not to explore fully the difficulties around this specific area. Although the guidance is relevant to those involved with pension sharing, it is not intended as a guide on this aspect of regulation and the issues surrounding it.
We did respond to comments that we had focused narrowly on some particular
divorce matters without adequately addressing the full range of issues.
We have therefore removed any detailed comments on divorce issues, which we believe are properly the responsibility of other authorities."
Who they are is not defined .......

Moderators: wikivorce teamrubytuesdaydukeyhadenoughnowTetsSheziLinda SheridanForsetiMitchumWhiteRoseLostboy67WYSPECIALBubblegum11