Change in pension law helps divorced women

Due to a change in pension legislation, thousands of divorcees should see more substantial payouts in the coming tax year for their ex-spouses’ pensions.

This will be coming into effect from April 2009, the age of which a divorcee will be able to claim the same benefit as a former partner who enrolled in a particular personal pension scheme or occupational pension scheme will be lowered. It has been lowered by ten years allowing the ex spouse to draw benefit from the age of 50, instead of 60, plus out of their one-time partner’s pension pot total, they will be able to take a 25 percent payout in tax-free lump sum.

This would mean that if you are 47 and say your ex wife is 52, she would be able to start drawing down from your pension before you do. This change will be great news for women, as generally in a divorce they are likely to receive a pension benefit as part of the settlement. It has been said that this change has been needed for some time.

Currently you have to wait until your 60 years old to receive benefits or draw down a tax-free lump sum if you are not a member of the pension scheme.

This news come after the reports showing that divorce rate in the England and Wales is down for the fourth consecutive year, although the number of couples 60 and over divorcing have increased.

Source: FT