01 September 2008
Restrictions on people who receive part of their ex-spouse's
pension benefits following a divorce will be removed from April
2009.
The Department for Work and Pensions (DWP) confirmed it will
reduce the age at which divorcees will be allowed to claim the same
benefits as ex-partners will be reduced from 60 to 50
Also changing are safeguarded rights (the part of a pension
credit from a divorce that is derived from contracted-out benefits
similar to protected rights in personal pensions). Safeguarded
rights will be abolished on 6 April 2009, along with the current
restrictions that stop benefits being taken before the age of 60.
Furthermore such amounts will be available in lump sum form.
Standard Life recently claimed research carried out by the firm
had shown of those with a pension, 11% either had to give away part
of their pension or received some from their ex-partner.
Andrew Tully, senior pensions policy manager at Standard Life,
said: "This change is long overdue and will be especially
beneficial to women, who are more likely to receive pension
benefits as part of a divorce settlement."
Pension Offsetting is still the most common way of dealing with
pension rights on divorce (where an asset of equivalanet value is
given up) but rights can be split.
http://www.pensionsadvisoryservice.org.uk/pension_rights/divorce/
Tully added: "Giving people more flexibility to take pension
benefits when and how it suits them best is a welcome development.
When going through an emotional upheaval like divorce or
separation, pensions are unlikely to be at the forefront of
people's minds. But starting afresh can have serious implications
on your financial future, so it is crucial to take expert financial
advice."
The restrictions were originally scheduled for October 2008 via
the current Pensions Bil. However this bill, if passed, will not
likely receive Royal Assent and become law until after October 1.
Therefore the changes will not now be seen until next April.
Progress of bills with Parliament can be viewed here:
http://www.parliament.uk/business/bills_and_legislation.cfm
