Last week, I featured in the Financial Times speaking about pensions and this week, The Sun. Why? Well, so many people overlook the pensions when they are getting divorced and I want that to change.
What’s special about pensions?
Pensions are an unusual asset- quite different from a bank account – because they have restrictions on when you can take your money (aged over 55 at present but due to rise to 57) and because there are tax benefits when you put the money in, you need to be thoughtful about what you take out and when otherwise the tax man comes calling.
Quite often, the focus will be on the house but it is a mistake to overlook the pension and to allow the emotional connection to the house to take over. Every employee has to have a pension fund that they pay into and their employer pays into. Even at the minimum rate, that can build up over a working lifetime.
There are some pensions that have good terms and underlying benefits, such as the NHS pensions, Teachers Pensions, Police Pensions, Fire Service Pensions, Civil Service and Armed Forces pensions. Some of these have good terms for drawing off a large lump sum and early retirement dates allowed. Some have big increases are a certain number of years service. There are also old banking pensions and big company pensions, like Ford Motors.
What to do about pensions
The point is to look into them and not to think they are a bit difficult to understand and you won’t bother. Think about getting older and not working. You may have a nice house but you can’t pay for your food shopping or a nice holiday with that. Pensions can be shared so that a piece of one spouse’s pension ‘pot’ can be broken off and transferred into the name of the other spouse, so you both have a decent pension fund for when you get older. You need a court order to do it but that is not hard to do.
If you want to read the articles there are HERE for the FT and HERE for The Sun.