Divorce is not a nice subject to talk about at any age but today we are seeing that more and more retirees are getting divorced. While many retirees in the UK are divorcing a number of couples who have chosen to retire abroad are also divorcing. The couple who have moved abroad are either getting the pension of their funds in the UK or they have opted to invest their pension into a QROPS.
When going through a divorce, funds from a pension and funds from a QROPS are treated very differently. One of the key things anyone moving abroad needs to consider, even in their retirement is “what if something has to happen to my marriage?” UK law introduced Earmarking Orders in the Pensions Act 1995 and Pensions Splitting in the Welfare Reform and Pensions Act 1999, however, these are only relevant for UK law.
These Acts cannot be attributed to offshore pensions such as QROPS. This means that more and more people are turning to QROPS investments abroad to keep their money safe from divorce. This is because the rules for QROPS do not fall under UK Law and it, therefore, means that funds placed into QROPS are safe from legislation which affects UK citizens in the UK. See the link for professional QROPS advice.
You will also find that money QROPS countries also do not have pension splitting rules in their respective pension Acts. In these cases, a retired couple who are seeking a divorce would need to turn to pension trustees of the QROPS who should be willing to facilitate an agreement between the spouses.
A pension is the biggest asset any couple will have after their home. It is for this reason that both parties need to make sure that they will be able to survive after the divorce is settled. To make sure that you are getting the best possible help throughout your divorce, it is advised that you consult the services of a trusted and professional financial advisor.
There are generally three ways in which pensions can be divided during a divorce. These are earmarking, pension offsetting and pension sharing.
Through earmarking the client will receive the agreed upon amount of their former partner’s net pension income. This can either be done through a lump sum payment or as a pension income. This also means that the client will not start to receive their portion of the pension payout until the former partner starts to receive their pension.
Through pension offsetting the value of any pension is offset against other assets and through pension sharing a percentage of any pensions is awarded to the former partner. Through pension sharing, the portion of the pension for the former partner may be transferred into the client’s own name.
A client can ensure that their pension is properly secured through the use of QROPS in that the various laws surrounding pension sharing, earmarking, and pension offsetting may be bypassed, depending on your country of residence, through various investments in QROPS.