Pension sharing when assets must be sold
Earlier this week we delivered a presentation to a family law department at a firm of solicitors in London, explaining the information gathering requirements for pensions and divorce.
One of the questions posed to us at the meeting was whether the implementation period for a pension sharing order can be extended if a pension asset takes a long time to sell.
For example, if a Self Invested Personal Pension (SIPP) had to sell a commercial property before the pension sharing order could be implemented, is it possible to take a longer period of time to sell the property?
Under ordinary circumstances, a pension sharing order has to be discharged within four months of the implementation date.
There are some circumstances where this time scale can be extended, including where the financial interests of the scheme members will be prejudiced should the trustees have to discharge their liability for the pension credit within the four month window.
If the trustees had to sell a commercial property quickly to satisfy a pension sharing order, it could be argued this quick sale would prejudice the financial interests of scheme members. Selling a property quickly usually means having to accept a below market value offer.
In order to get an exemption, the pension scheme member would need to apply to The Pensions Regulator before the end of the initial implementation period.
With Self Invested Personal Pensions becoming very popular, we expect to see plenty of divorce cases in the future where longer than four months is needed to implement a pension sharing order.
Photo credit: Flickr/Diana Parkhouse