Providers may be forced to alert divorcees about pension access

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The Department for Work and Pensions could force providers to notify divorcees that their former partners are accessing pension savings, the FCA says.

In January Money Marketing reported on pension lawyers warning that the reforms added a “layer of complexity” to the way pensions are shared on divorce.

In a consultation paper published last week, the FCA reveals it has been in talks with the DWP over guidance for trustees, providers and advisers “to ensure they take into account attachment orders and, where appropriate, notify the former spouse or former civil partners.

“The DWP is considering options to remind occupational pension scheme trustees to take into account attachment orders.”

With savers able take their entire pension pot as cash from the age of 55, there are fears savings could be disposed of to ensure less ends up in the hands of former spouses.

Attachment orders, sometimes known as earmarking orders, require providers to make payments due to non-member individuals.

The FCA adds it has discussed the possibility of requiring providers to notify former spouses if the customer has attempted to access their pension.

It says: “If the application is to access benefits in a way not expected, and that might be counter to the intent of the attachment order, the former spouse or former civil partner may wish to apply to the courts for a variation of the attachment order.”

The DWP would consult on any changes to legislation needed to implement these changes, it says.

But the regulator says it does not have concerns over pension sharing orders, which are now more commonly used, because these “transfers irrevocably a share of the value of the pension benefits to the former spouse or civil partner”.