Calling all Divorcees with Pension Attachment Orders

During your divorce did you secure a pension attachment / earmarking order (as opposed to pension sharing orders) as part of the financial settlement? Was such an order made before 6 April 2015? Then the Pension Advisory Group has advised that you should take immediate legal advice.  

When your pension attachment order was made, your lawyer, actuary or financial adviser could not have foreseen the introduction and subsequent impact of the pension freedoms, which came into effect in April 2015. The exact wording of your existing pension attachment order, coupled with the terms of the financial remedy order, will be crucial in determining the effect of these freedoms. It is strongly recommended that you seek legal advice regarding the current order. You may need to take further steps to protect your position, including varying the order or preserving the pension by either injunction or suitable undertaking.

Pension freedoms

In summary, the “pension freedoms” allow pension members to have greater flexibility and access to their defined contribution (as opposed to defined benefit or final salary) pension schemes. This could involve payment of a lump sum when the pension member is 55 years of age or older in lieu of future pension income.  

These changes may well impact upon the effect of the pension attachment order secured in the non-member ex-spouse’s favour. The pension member retains ownership and control irrespective of the percentage of the pension earmarked to the ex-spouse. It has been reported that some members have attempted to thwart the original intention of the pension attachment order by using this new flexibility. For example, if an order is silent on the issue then in theory the member could commute 100% of the pension fund into a lump sum and leave no fund available to pay the ex-spouse the anticipated pension income.

Notification of application to commute

If the member applies to have part of the pension commuted then the pension fund administrators should inform the ex-spouse of the member’s application. This should then prompt the ex-spouse to seek legal advice (as well as potentially financial advice) immediately. But this supposes that the pension administrators have up-to-date contact details for the non-member ex-spouse.

Contact us

At Lanyon Bowdler, we offer fixed fee appointments for new clients. We can advise you as to whether you are at risk if the above circumstances apply to you and you have all the relevant paperwork to hand. To make an appointment please call our Shrewsbury office on 01743 280280 and ask to speak to a member of our specalist family team.