Do You have a Pension Attachment Order?

Pension Attachment Orders (more commonly known as Pension Earmarking Orders) were introduced into family law by The Pensions Act 1995. They applied to family financial orders made in divorce proceedings in respect of petitions issued on or after 1 July 1996.

Pension Sharing Orders were later introduced and applied to family financial orders made in divorce proceedings in respect of petitions issued on or after 1 December 2000.

Pension Attachment Orders provided for pension income and lump sums to be paid to a former spouse.

The new pension changes that came into force on 6 April 2015 could affect those who have existing Pension Attachment Orders. For example:

1. Prior to 6 April 2015, pension members were only able to take 25% of their pension fund as a lump sum. Pension Attachment Orders were made on this basis. A member can now encash the whole of their pension fund (75% of which would be taxable). Commonly, a financial order would have provided for the former spouse to receive a percentage of the lump sum. This could now provide the former spouse with a much higher lump sum than the court envisaged.
2. If a financial order had provided for a former spouse to receive periodical payments (maintenance) by way of a Pension Attachment Order and, under the new regulations, the pension member takes the whole of their pension fund as a lump sum, there will be no fund from which to pay periodical payments. The former spouse is left with nothing.

Whether you are a pension member or a recipient of a Pension Attachment Order you should think carefully about the consequences of the new pension regulations, how they could affect you and how you can protect yourself.

For more information, please contact Elizabeth Bettes on 0118 9575337 (Reading Office) or Sandra Marshall on 01344 887510 (Windsor Office).

Published on 06/11/2015