The Problem: I am divorcing my husband and I have been told that I can receive a share in his pension. I do not trust him. What can go wrong before I receive my share?
The Solution: Unfortunately, the pension scheme cannot act until it receives both the pension sharing court order and your decree absolute. Until that time, the pension belongs to your husband for him to deal with as he wants. Pension sharing only applies to UK pensions. If your husband were to transfer his pension overseas, then the pension could not be shared.
Similarly, if your husband took benefits from his pension, this would leave you with no lump sum being available from any share. Lump-sum pension death benefits usually fall under discretionary trusts. The pension scheme will pay usually in line with a nomination submitted by your husband. Without your knowledge, he may well change such a nomination to another person.
Moving on now to the time when the pension sharing order and decree absolute have been issued to the pension scheme, there is an appeal period of 28 days, during which time the pension scheme cannot act. Following this, the pension sharing order is deemed to be effective. However, it is not in place until it is implemented. The pension scheme will write to you both requesting information, including the payment of any fees and if your pension share is going to be moved to another pension scheme, with details of the pension scheme that is to receive your pension share.
It is only after this that it will create the implementation date following which the pension scheme must implement the pension share as quickly as possible but no more than four months later. Once implemented, then and only then is the pension share totally under your control. At this point, your husband can do nothing about your pension and what ever happens to him in the future is of no consequence to you.
To implement the order, the pension scheme will require both you and your husband to take certain actions as detailed. If you do not respond, then the share is not implemented. If your husband does not respond, you have recourse through the courts but beware it will be an expensive and lengthy process.
Until the pension share is implemented, the pension is still in the name of your husband and therefore, while the pension scheme would be wrong to allow any movement of the pension overseas or the taking of benefits, between the 28-day appeal date and implementation, your husband has control over the investments. He could, for example, invest the money in some extreme area resulting in a significant loss in value. You have very little recourse if this were to occur.
The situation regarding death benefits is difficult before decree absolute but becomes even more so in the period through to you receiving your pension share. Each individual scheme is different and there are even situations if your husband were to die between the issuing of the pension sharing order and the order being implemented, where no benefits would be payable to you or beneficiaries nominated by your husband. Great care needs to be exercised about the expectation of death benefits until you receive your share.
There are various legal steps that can be taken to prevent most of the above events. It is vital that you discuss this matter with your solicitor. Unfortunately, this step is not usually taken and the only time we know that there is a problem is after something has happened. Similarly, if your husband were to die prior to the pension sharing order being implemented, your solicitor can take steps to protect your estate but you must ask him to leave the right to claim open until pension sharing orders have been implemented.
Richard Jacobs is managing director of Richard Jacobs Pension Trustee Services