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Pension firms struggling with divorce transfers

IFAs are struggling to find pension providers fully equipped to accept pension transfer business arising from divorce.

Since December 2000, pension funds can be split on divorce and given to an ex-spouse in the form of a pension credit which can be placed theoretically elsewhere with another provider.

But IFAs say many pension companies are unable to accept the business, with many offering only a limited service. Advisers claim life offices are missing out on big money transfers.

Legal & General, for example, only accepts pension credit transfers for people with existing stakeholder plans.

It does accept credits to a section 32 buyout plan, which many other providers have shunned, saying the benefits are not as good as a personal pension.

Norwich Union is currently only able to accept a pension credit into its stakeholder plan but is reviewing its service.

Axa, Clerical Medical and Scottish Life can acc-ept pension credits into any of their schemes.

Friends Provident, Scottish Equitable, Scottish Widows, Skandia and Standard Life can accept pension credits in to personal pensions and stakeholder but do not offer an s32.

IFAs say the market is picking up as more divorce cases come through under the new legislation but it is still confusing.

Richard Jacobs Pension & Trustee Services director Richard Jacobs says: “It is a nonsense that these companies are not ready for it. The whole things is a bit of a mess. Pension providers are turning away big sums of money.”

L&G pensions marketing director Andy Agar says: “The regulations needed a lot of systems&#39 work and we had to decide our priorities. We are looking to expand our range in this area.”

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