PENSION PAYMENT TO EX SPOUSE ON DEATH

A question for my friend who has a bit of a dilemna:

My friend divorced in 1999 after a marriage of about 18 years. Her children were around 13 and 15 at the time. They agreed a financial settlement through solicitors and I assume there was a Consent Order. He told her at the time that he had a pension that he would keep her name on. He started paying into the pension in 1994 but I''m not sure if he kept up payments after they were divorced.

Her ex did not remain in contact with the children for very long - in fact he became quite hostile towards them, even when his daughter attempted to contact him to announce that she was getting married last year.

He re-married 8 years ago but took his own life recently. My friend has had a letter from the pension company to say that she is down as the person to get the lump sum payment etc. She does not want the money herself even though she has struggled financially to raise her children, but would be happy to accept the money for the children. She started to draft an email to send to his widow but I have advised that she refrains from doing this for now, and that she should find out how long after their divorce he kept paying into the pension. Morally, I feel that if they were contributions made only during the marriage then my friend should be entitled to keep it as that appears to be what he intended. I''ve also suggested that she checks the wording of her consent order.

My question is (long time coming): how would she stand if the widow of her ex comes after her for the money, if there is no mention of the pension in his Will (if he had one)? Also, if the consent order makes reference to pensions, does the fact that he kept my friend as beneficiary overide that?

My friend has said that she is not prepared to get involved in any legal disputes over it and would just hand it over to his Widow if it starts to get difficult. The widow has been very unkind to my friend over a long period of time, although she was not the reason for the marriage break up. He was a serial adulterer. There are no children from the second marriage. I know this is all irrelevant but hopefully it helps to paint the background picture.

With most private sector pension schemes any lumps sum payable on death is at the discretion of the pension scheme trustees. It is usual for the member of the pension scheme to specify the preferred person or persons (usually referred to as an "expression of wish form")to receive the lump sum.
The trustees do not have to abide by the member''s expression of wish form, it is not uncommon for the details to be outdated and for the member''s circumstances to have changed significantly if they have not got around to providing a revised form.
I would expect the trustees to carryout some investigative work to ascertain all potential beneficiaries before making a decision as to who to make the payment to. If the trustees make an informed decision and can demonstrate that they took all relevant information into account then there is little if any scope to challenge the decision. From reading your question, I got the impression that the trustees have not yet made that decision.

That''s very helpful and interesting, thank you. I''ll try and get more detail from the precise wording in the letter.

My friend has now spoken to the pension company and it appears that her ex stopped paying into the pension in 2001 and started another scheme. This makes me think that it was his intention that he kept his word that it was for he ex wife rather than his new wife and not just a case of him forgetting to change the name of the beneficary. There is no other provision in the Will for his children. His new wife is already contesting and has been in contact with my friend offering her 25% of the money. You can imagine how my friend now feels when, at the moment, it''s her name as beneficiary so it is not really up to the new wife to be offering what isn''t even hers.

My friend is worried about accepting her offer as she could change her mind. Is also worried that if the new wife goes after the whole lot and involves solicitors that she could end up with nothing to pass on to her own children.

Any ideas as to the likely outcome of the Pension Company''s decision over this would be really useful!

Action, any views would be pure speculation. I can see both sides of the argument. I presume that your friend was no longer financially dependent upon her ex husband?
Is there any evidence of the agreement to keep her name as the beneficiary?
All I can suggest is that she ensures that the trustees are aware of all of the facts.
Ian

No, she wasn''t financially dependent and no, there is no evidence of what her ex said about her being beneficiary as far as I know. I think the strongest argument is that the bulk of the payments were made into the fund while they were still married.

What a difficult decision it is for her - to accept the £20k from the new wife or risk losing it all. She wants nothing herself but her kids would really benefit from it to start themselves off in life and repay student loans.

P.S. Is it a case that the pension trustees make a decision on the facts that they are given and that''s an end to it or is it the case that they may cave due to legal pressure from his widow.