Good News in Divorce

A recent update to the legislation on pensions and divorce came into effect on the 6th April regarding “safeguarded rights”. "Safeguarded rights" arise when a couple divorce and someone is awarded a pension credit which contains "protected rights". "Protected rights" are created when you contract out of the state pension schemes (SERPS or S2P). Until last month, these safeguarded rights could be taken before age 60 and could not be used to provide a "pension commencement lump sum" (tax-free cash). This changes following the Pensions Act 2008. With effect from the 6th April 2009 safeguarded rights will be abolished.

This means that pension credit members of both personal pensions and occupational pension schemes will be able to take their benefits from age 50 (55 from April 2010) and up to 25% can be taken as a pension commencement lump sum. This change affects any benefit coming into payment after the 6th April 2009 even if they divorced many years ago.