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Pension Earmarking.

Warning of the impact of pension reforms on divorces.

The government may have inadvertently opened up a loophole that can have a major impact in divorce cases.

In the past it has been commonplace for a pension earmarking order to be placed upon a spouses pension during divorce proceedings, this is where a pension, in the form of lump sum and/or income, is paid to a former partner. This has now been superseded by pension sharing, a much better arrangement, and the majority of pension orders are now concluded under pension sharing, it's with pension earmarking that a problem can arise.

If, for example, upon divorce an agreement is made where by the former partner was entitled to receive a percentage of income from the pension, with the new reforms the pension may not deliver an income as it can all cashed as a lump sum.

I would recommend that if you have had pension entitlement awarded to you via a pension earmarking arrangement or you are in any doubt you should check with a family law solicitor.

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