Divorce - Transfer of share of spouse's pension

pillarboxred

Hello, I am 46 and currently edging through the divorce process. I do not have a personal pension as been the chief family carer and not been in paid employment for years. Our current agreement (still pending Decree Nisi stage) includes 50% of husband's company pension which will be around £160k. I am told I need to have my own pension fund for the sum to be transferred over following the Decree Absolute stage.

My priorities are: low management rates i.e no higher than 1% and a safe investment source which will yield a reliable sum in the future. I am a total novice with this so therefore would appreciate advice/tips from anyone who is on the ball with Pensions in general and/or has been through a similar divorce/pension route.

Thank you for your time spent reading this.

atush

a safe investment source which will yield a reliable sum in the future.

what do you mean by SAFE? No equity is safe really, but cash isn't safe from inflation. What any pension is invested in is what you choose it to be invested in. If you feel like you can't or won't make the decision yourself you are going to have to use an IFA. Try unbiased.co.uk. If you feel you are able to read up and make some investment decisions yourself, look at the DIY route and someone like Cavendish online.

It may seem daunting to you now, but you do need to learn this stuff so you no longer have to rely on others.

Whatever you do decide, make sure you keep contributing to the pension as 160K isn't enough.

Gracchus_Babeuf

pillarboxred wrote: »

Hello, I am 46 and currently edging through the divorce process. I do not have a personal pension as been the chief family carer and not been in paid employment for years. Our current agreement (still pending Decree Nisi stage) includes 50% of husband's company pension which will be around £160k. I am told I need to have my own pension fund for the sum to be transferred over following the Decree Absolute stage.

My priorities are: low management rates i.e no higher than 1% and a safe investment source which will yield a reliable sum in the future. I am a total novice with this so therefore would appreciate advice/tips from anyone who is on the ball with Pensions in general and/or has been through a similar divorce/pension route.

Thank you for your time spent reading this.

Have you considered asking your husband to pay you cash instead of going through the palaver of a pension transfer process? It might be easier and quicker.

dunstonh

My priorities are: low management rates i.e no higher than 1% and a safe investment source which will yield a reliable sum in the future.

No such thing exists.

You have four main risks. 1 - investment risk 2 - inflation risk 3 - shortfall risk 4 -provider risk.

Provider risk is not really an issue with modern pensions utilising unit linked funds or direct assets. The other three are the main issues.

You need to define safe as in what it means to you as it can mean different things to different people. Using cash in a savings account may be considered safe by some people but others would consider it risky given inflation risk and shortfall risk.

pillarboxred

atush wrote: »

what do you mean by SAFE? No equity is safe really, but cash isn't safe from inflation. What any pension is invested in is what you choose it to be invested in. Fair point. You have trumpeted a timely wake up call. If you feel like you can't or won't make the decision yourself you are going to have to use an IFA. Try unbiased.co.uk. If you feel you are able to read up and make some investment decisions yourself, look at the DIY route and someone like Cavendish online. I have sat on the fence with this long enough - feel resistant to using an IFA (too cynical to do so) yet feel overwhelmed by the challange of taking hold of the reins i.e about to start new job, got to find new home in a month, 2 kids to watch over etc - as opposed to being too intimidated to try to develop a tight grip on this rein. There does not seem to be the time to master a Dummys grasp re: investments and decision making.

It may seem daunting to you now, but you do need to learn this stuff so you no longer have to rely on others. Too true.

Whatever you do decide, make sure you keep contributing to the pension as 160K isn't enough.

. Again, fair point. Sadly my new job is only until August, when there is the chance to contribute
I will.

pillarboxred

Gracchus_Babeuf wrote: »

Have you considered asking your husband to pay you cash instead of going through the palaver of a pension transfer process? It might be easier and quicker.

. Not thought of this - will see if it is an option. Meanwhile, when the employment conditions are right I will dive into that possibly simpler palaver of being responsible for my own future via own pension pot.

pillarboxred

dunstonh wrote: »

No such thing exists. Ugh!

You have four main risks. 1 - investment risk 2 - inflation risk 3 - shortfall risk 4 -provider risk.

Provider risk is not really an issue with modern pensions utilising unit linked funds or direct assets. The other three are the main issues.

You need to define safe as in what it means to you as it can mean different things to different people. Using cash in a savings account may be considered safe by some people but others would consider it risky given inflation risk and shortfall risk.

. Thank you for this ray of light too.

Can I clarify my understanding/level of misunderstanding with your 4 identified risk criteria (I warned you I was a beginner):

1. Investment risk - e.g. commodities like grain (which I consider an immoral investment), stocks or shares will dip & dive according to the market winds therein lies the risk?

2.inflation risk - current low interest rates for dormant funds = low increase of pension sum - cash will depreciate

3. shortfall risk - not a clue what this is? At this stage I would not be paying anything regular in as my new job to be runs only until next summer, although if there is a chance to begin a process I will ASAP. Basically, at present I am looking for a 'safe' (sorry) holding pen for the transfer of my share of my husband's pension pot.

4. Provider risk - as covered by yourself above. I guess as the recent banking tale has shown - there is no safety in size of company however, maybe you may suggest which pension providers may be worth looking into because they carry a lower risk of nosediving into oblivion & taking your money with them> ?

From the outside looking in the pension field is a bewildering landscape and one of the many Inconvenient Truths that this long out of paid employment individual has been happy to shirk from.

From what you and others say - 1 person's safe pension pot is another's persons ticking time bomb. I suppose what I meant by safe was something like government bonds as that is 1 safe conservative pair of hands that I am familiar with via savings.

atush

1- yes things can go down as well as up..Not sure why you feel commodities such as grain are immoral. They have a value and they ultimately feed people.

2- inflation reduces the buying power of cash which is why people favor equities for long term investments like pensions

3- shortfall risk is the risk that your pension pot will not give you the income you need/desire. this shortfall risk could explode if you get cash from your husband rather than a transfer of his pension funds as you may be tempted to spend it. So put it in a pension of you have other options for money to live on, property to live in etc.

Ticking time bomb? Not sure who says this, the ticking time bomb is what happens when you don't save for a pension. Cash and govt bonds might give you a small but reliable income. But they might not save you from losing ground to inflation. Bond prices can go down as well as up like shares.

dunstonh

1. Investment risk - e.g. commodities like grain (which I consider an immoral investment), stocks or shares will dip & dive according to the market winds therein lies the risk?

Yes. Investments will go up and down.

2.inflation risk - current low interest rates for dormant funds = low increase of pension sum - cash will depreciate

Not just current low interest rates. Historically, cash does not give growth. At times it will be slightly above inflation others below or about the same. This is what makes it so poor for long term planning.

3. shortfall risk - not a clue what this is? At this stage I would not be paying anything regular in as my new job to be runs only until next summer, although if there is a chance to begin a process I will ASAP. Basically, at present I am looking for a 'safe' (sorry) holding pen for the transfer of my share of my husband's pension pot.

If you need £x pm income in retirement and your pension fund needs to grow by y% a year to hit it, then is your investment capable of achieving that. i.e. if you need 7% a year average but use cash deposits then you are never going to hit it. If you use a mixes portfolio then you stand a chance of hitting it

4. Provider risk - as covered by yourself above. I guess as the recent banking tale has shown - there is no safety in size of company however, maybe you may suggest which pension providers may be worth looking into because they carry a lower risk of nosediving into oblivion & taking your money with them> ?

Pension provider is largely irrelevant to your risk when you use unit linked funds or direct assets.

I suppose what I meant by safe was something like government bonds as that is 1 safe conservative pair of hands that I am familiar with via savings.

For part of the money yes but for all the money it would be quite risky as its an eggs in one basket approach.