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Divorcees Warned To Check Their Pension Income Orders Against Former Spouses

In light of pension reforms, there has been a change as to pension members being able to access benefits.  This only applies to non-final salary schemes.  The situation created is that of over 55s can technically access their entire pension fund.   Early Orders in respect of pensions were restricted to what were then termed Ear marking Orders” which subsequently became known as “Pension Attachment Orders”.  These were deferred lump sump and maintenance Orders.  The non-member spouse would have a right to a percentage of the members pension lump sum and pension income.  Provision was also made that the scheme member might have to undertake to the Court to commute the maximum pension possible to a lump sum (usually a maximum 25% of the fund).  It may be that these Orders require clarification in light of the new pension reforms. 

Presumably the lump sum element is protected as the Order would cover a percentage to be received.  The issue becomes that of pension income if the non-scheme member were seeking to rely upon that in their retirement.   Scheme members may counter that argument by saying thanks to any enhanced lump sum being received, they have not suffered any detriment. 

 It is not known as to whether a pension fund subject to a registered pension ear-marking/attachment Order will allow the entire pension pot to be claimed.  People should find out what the situation is. 

The main danger as we see it is where a Pension Attachment Order was not made requiring the scheme member commute the maximum possible into a lump sum for which the non-scheme member was getting a fair share. Rather where it only covered the non-scheme member having a percentage of the pension income.