Independent Financial Life Planners Bishop's Stortford: Divorcees at risk with pension reforms

Tuesday, 26 May 2015

Divorcees at risk with pension reforms

As experienced independent financial advisors Enable in Bishop’s Stortford know resolving the finances after divorce can be a daunting task. Since the pension changes have come into effect this April there are concerns that thousands who thought their financial divorce was over could find themselves struggling when estranged spouses cash in policies to stop them being split evenly.

Lots of couples who divorced before the millennium signed an agreement to say that the income from a final salary pension would be shared in retirement, it was a process known as an ‘ear-marking order’ meaning a percentage of the income was ear-marked for the divorced spouse but the main earner retained control of the pension. Divorcees who agreed to split a final salary pension pot belonging to their spouse could now find themselves penniless because of loopholes in the new pension rules, a loophole that could mean divorcees could intentionally cash in their life savings to deprive their former wives or husbands of an income in retirement.

Tom McPhail, head of pensions at investment firm Hargreaves Lansdown said: ‘This is an unintended consequence of the new pension rules. There may be restrictions on doing this but it would very much be up to the people running the scheme to decide how the rules are applied.’
Normally it is not advisable to take a final salary pension as a cash lump sum because of the huge benefits the regular income provides. Enable’s IFAs in Bishop’s Stortford can help talk through any issues relating to the new pension rules.

Issued by: Enable Independent Financial Life Planners  25c North Street, Bishops Stortford, Herts CM23 2LD Telephone: 01279 755950 - Fax: 01279 657339  Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority. It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us. NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

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IFA Bishop's Stortford

At Enable Independent we know that our clients trust us and rely on our advice to help them to plan a better, more secure financial future. This is a responsibility that we take very seriously especially because we know that many clients have chosen us on the recommendation of friends and family. Each one of our advisers has deep expertise in their area of specialist knowledge and, as a team, we hold some of the highest qualifications available in the financial advice industry.

Our job satisfaction comes from using our skills to find workable, affordable and flexible solutions to meet our clients needs. Whether we are planning for known future funding requirements such as house purchase, school fees or income in retirement - or for the unforeseen such as job loss, long-term illness or early death, our independence from any product provider enables us to view the marketplace impartially. Our training permits us to look beyond a product's marketing hype and select on the basis of its fitness for purpose.