We will all have read in the press that there have been changes to the rules on pensions. It is now possible to take more than the previously possible 25% tax free cash from the pension capital. Rather than taking merely 25% cash and then an ongoing income from the remaining capital - it is now possible to take all the capital as cash (subject to various tax charges) and that may amount to a significant capital sum.
What does not seem to have been highlighted is the way in which these rule changes may seriously and adversely affect those who have in the past settled their financial divorce settlements by using pension earmarking.
Pension earmarking is not used so much now but was widely used prior to the introduction of pension sharing in the late 1990’s and early 2000. A spouse with a fixed share of their ex’s pension income by way of earmarking should now be checking that the ex is not intending to take all the capital out as cash; thus leaving no capital to produce a pension income going forward.
If you have the benefit of an ear marking order, then you should be obtaining legal advice as quickly as possible particularly if your ex is approaching, or is of, retirement age. It may be necessary to get the original court order amended to prevent your ex drawing down all the capital as cash and leaving you “out in the cold”.
Back to In The Press