Duncan Lewis

Family Law

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Divorcees may have to give more of their pension income to their former spouse

Date: (13 February 2013)    |    

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People who have separated in the past 12 years could end up giving more of their pension income to their former spouse.
Pensions funds are regarded as more valuable asset of a marriage often more valuable than the home, but according to a report from Divorce LifeLine in as many as half of the 1.5 million divorce settlements in the UK since December 2000, the divorce pensions may have been undervalued.
The specialist financial advice firm said that hundreds of thousands of divorcees could benefit from a boost in retirement income following miscalculations of the valuation of their ex-spouses pension pot. Lawyers have advised that divorcees could stake a claim up to 12 years after the legal separation has been settled.
In 2000, the law was changed to allow pension sharing between couples, meaning a pension provider can be instructed to pay a percentage of retirement income to someone other than the pension scheme member.
Family law lawyer the head of family law at a law firm, said people have to realise the importance of looking beyond the valuation given by the pension provider, the cash equivalent transfer value, and to seek an accurate valuation of a pension from an actuary."
Jeremy Wolff, from Divorce LifeLine, said that problems occurred when divorcing couples engaged in miscalculated "offsetting", where a husband or wife without a pension receives a greater share of a property or other asset instead of a share of their spouse's pension.
A lawyer is not qualified to do offsetting as there is no fixed calculations and also it involves comparing a future income with a current value of assets therefore it is essential that an actuary is instructed to calculate the correct figure for offsetting if a miscalculation has happened he said.
A leading family lawyer says that a pension fund should be relied upon to provide the correct value of a retirement pot at the time of a divorce.
Solicitors would typically rely on the cash equivalent value issued unless there was good reason not to, in which case a pension’s actuary or financial adviser would be asked to value it instead," she said.
But when a spouse has to meet legal fees this could become expensive especially when it would be need of the hour to do a balancing exercise to carry out to decide whether the valuation appears inaccurate and therefore to incur the expense of an independent valuation.

 

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Duncan Lewis Blog - Posted By: on 13 July 2011 at 16:9

Good to see that Duncan Lewis are being recognised for all of their hard work.