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Issue 2 Family Mediator Monthly July 2016
FAMILY MEDIATOR MONTHLY JULY 2016
(published by Affordable CPD)
IN THIS MONTH’S EDITION…
First of all many thanks to all those who provided feedback on the first issue – really helpful and lots of ideas for the future when the subscription service is up and running and I can commission articles. All feedback on existing or ideas for content gratefully received.
As promised in addition to the legal updates, this issue focuses on pensions – recapping on why pensions are important to mediators and what we need to know about them as well as the significant changes over the last couple of years.
Next month’s issue will have a focus on personal taxation and welfare benefits, the other two key areas we need to keep up to date with. This month there’s just a brief item on stamp duty – a change in the last budget that will have implications for some clients using mediation for financial settlement.
There’s also a new section on Q & A – if you provide the questions we will do our best to find the answers. Obviously it’s blank this month…
INDEX
LEGAL UPDATEUseful articlesJudgmentsWhat’s new?Consultations
2467
LEGAL AID UPDATE 8PERSONAL TAXATION & WELFARE BENEFITSStamp duty
89
PENSIONS RECAP AND UPDATEWhy pensions are relevantDifferent types of pensionWays of dealing with pensionsValuing pensionsSignificant recent pension changesPension Protection FundSources and resources
910101112131515
CONFERENCES AND COURSESTaking bookingsForthcomingNon-mediation specificOn-line
17191920
Q&A 20
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
LEGAL UPDATE
USEFUL ARTICLES
Occupation Orders: Are we there yet?
This article by Kevin Gordon, Pupil Barrister at Coram Chambers explores the courts’ developing approach to the application and granting of occupation orders under section 33 (6) and (7) of the Family Law Act 1996.
Occupation orders are used to regulate the occupation of the family home, mainly where domestic violence or a tempestuous relationship that makes cohabitation impossible, and are seen as draconian because they override property rights and should only be justified in exceptional circumstances.
The article sets out the statutory framework and then uses case law and guidance to explore the circumstances in which occupation orders have been issued or not and the way this has led to greater consistency and clarification of ‘exceptional circumstances’.
It concludes by recognising that exceptional circumstances may include non-violent conducts and that it is for the court to decide, on a case by case basis, what those particular circumstances might be, weighing their relevance to the matter before determining the final outcome
(Source: Family Law Week, 11th July 2016, full article can be found on http://www.familylawweek.co.uk/site.aspx?i=ed161661)
Finance & Divorce Update, July 2016
Edward Heaton and Jane Booth of Mills & Reeve LLP provide a review of some important recent judgments in relation to financial settlement and divorce.
Second bite at the cherry in a different jurisdiction refused
Permission to appeal was refused for ex wife seeking to open financial proceedings in England in a case where the original settlement had been made in Australia and a subsequent application to re-open the case there had been refused. The appeal court judge dismissed the application for leave to appeal, supporting the conclusion of the High Court refusal to allow the application on the basis that the two legal systems are comparable, the outcomes were unlikely to have been very different, the Australian court had not been persuaded by the wife’s arguments for setting aside the original agreements and that any new information was a matter for the Australian court.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
£3.5 million settlement to co-habiting ex wife, ex husband’s permission for leave to appeal refused
Another one of those high value cases where the ex wife was granted £3.5 million in a needs based settlement subsequently challenged by the ex husband. He sought leave to appeal the settlement for the second time and his application was again refused on the basis that: the ex wife, after a long marriage and not being remarried, is entitled to a settlement which allows her to meet her needs and these are not necessarily diminished by cohabitation (first ground of appeal) and that the court had not acted unfairly but could only work with the information and evidence he had provided which formed the basis of the judgment. Subtext: if you don’t play by the rules don’t complain if the outcome isn’t the one you wanted. The ex wife also sought leave to appeal and this has been granted. Watch this space…
A family affair
This is an interesting and complicated one (actually there were two judgments), which you’ll have to read for yourselves if you want the details. Essentially though ex husband pleaded poverty claiming that he could make a lump sum settlement of £150,000 but that was all he could manage in full and final settlement. This was on the basis that the investment opportunity he had been involved in (with his parents and brothers) had gone badly wrong so that with legal fees factored in his financial position was one of debt rather than assets. The horribly complicated bit is his wider family entrepreneurial interests.
She challenged his offer on the basis that he was being less than honest about his situation. Having heard the case the judge agreed with her and awarded a lump sum settlement of £500,000 to house herself and the children and pay some of her legal fees, on the basis that the ex husband had said he was worth £1 million in 2010 and the judge thought that behind all the smoke and mirrors that was probably still the case. Whilst the ex husband did not have that amount, on paper at least, the Judge suggested that his wider family could support their son/brother to enable the payment to be made. Recognising that the court could not impose on family members he nevertheless thought it a reasonable expectation that they would assist.
I particularly liked the line in the second judgment, which added a timetable to the first and refused permission to appeal either the financial settlement or costs, that said ‘This is not a case where Mr C's litigation misconduct and dishonesty are sufficient to justify an indemnity costs order, but it was close.’
Insolvency and divorce
We all know that bankruptcy generally trumps divorce and a recent High Court ruling showed insolvency trumps (questionable) separations too. This was a case where the husband was being sued following a reneged on agreement with creditors, so he and his wife separated and a number of assets were transferred between them (5 properties, various cars and cash) with an informal agreement that the wife wouldn’t start divorce or financial remedy proceedings.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
The Judge found that the transfers were intended to deprive the people who were suing the husband and the wife was ordered to pay the husband’s share of the assets over to them, save for an amount to cover school fees for their child.
(Source: Family Law Week, 18th July 2016, case law update section of article on: http://www.familylawweek.co.uk/site.aspx?i=ed161787)
JUDGMENTS
The voice of the child
The outcome of this case will have been welcomed by the Family Justice Young People’s Board.
The parents were living in England but the child was born in Romania. Mother returned to England with him when he was 8 weeks old and he has lived here ever since. The parents separated and the dad returned to Romania where he instigated divorce proceedings. The Romanian court granted him custody of the child. Needless to say there followed lots of court hearings looking at, among other things, the jurisdiction of a Romanian court to make orders about a child who had never lived in Romania and was resident in England. In November 2013 the highest court in Romania ordered that the child (then aged 7) should live with his father and move from England to Romania.
The case was originally heard at the Principal Registry, where the Romanian order was recognized and registered. The mother subsequently appealed and the Court upheld her appeal on the basis that the child had not been heard in the Romanian proceedings. Therefore the Romanian order would not be recognised nor enforced by the courts in England and Wales. The father then appealed the appeal court decision but the court rejected his arguments, which challenged the child having a voice as a ‘fundamental principle’ of procedure.
There can now be no doubt that it is a fundamental principle of procedure in England and Wales that children should be heard in proceedings in which their welfare is engaged. Which is good news.
(Source: Family Law Week, 4th July 2016, full article available at:http://www.familylawweek.co.uk/site.aspx?i=ed161493)
What constitutes non-marital assets?McJ v MAJ [2016] EWHC 1672 (Fam)
This judgment relates to a financial remedies case where the total wealth available for distribution was somewhere between £10.5 and £11.6 million. The husband wanted the (second) wife's financial award to be based on having her needs met rather than on the basis of sharing. He reasoned that he entered the marriage (in 2000) with established
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
wealth built up whilst he was married to his first wife.The key outcomes were that:
even though the income from a capital asset might be used to maintain a marital lifestyle, that did not fundamentally alter the nature of the asset as non-matrimonial;
this is on the same basis as one party receiving a significant inheritance before the marriage where the capital remains untouched throughout the relationship, the use of any interest received does not affect the nature of the inheritance as non-matrimonial property.
(Source: Family Law Week, 11th July 2016, full article can be found on: http://www.familylawweek.co.uk/site.aspx?i=ed161708)
Needs based settlement in high value case
Setting aside the staggeringly high sums of money involved (ex wife awarded clean break settlement of £75 million as against her claim for £238 million) this case provides an insight into needs based settlements in high value cases.
Juffali v Juffali [20016] EWHC 1684 (Fam)
Quite a complex background and history but essentially husband is a Saudi national - now aged 61 years, wife was born in the USA - now aged 54 years. They met in 2000 and married in 2001. It was his second marriage. He was a fabulously wealthy businessman (electricity and telecommunications), she had been a successful international supermodel. They agreed that she stop work on their marriage and she has not worked since. Their main residence during the marriage was in England and they have a 13 year old daughter at private school here. She was going to divorce him in August 2013 but never served the papers. He pronounced talaq in Saudi Arabia in September 2014.
In December 2014 she applied for and was granted leave to make an application under Part III of the Matrimonial and Family Proceedings Act 1984 which covers seeking financial settlement on the basis of an overseas divorce or judicial separation.
In the judgment the factors considered were the relevance of a 'stratospheric', 'unimaginably high' marital standard of living claim by the wife and the legal framework as developed through previous judgments.
The court thought a clean break settlement was desirable and awarded her £18 million to purchase a home in England; did not make an award for a second English home (she already has a substantial property in Beverley Hills) or for support of her extended family; did not think any adjustment should be made on the basis of future co-habitation or marriage given there is no existing committed relationship; capitalized maintenance at £44.3 million (based on Duxbury, £2.5 million a year, stepping down in 2 child age stages to 33% and 25% respectively) and capitalized child support at £1.77 million.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Chattels were left for them to sort out between themselves.Postcript: the latter will be difficult as sadly Mr Juffali died on 20th July 2016.
(Source: Family Law Week, 18th July 2016, full article can be found on: http://www.familylawweek.co.uk/site.aspx?i=ed161810 )
WHAT’S NEW?
New Family Justice Council Guidance on Financial Needs on Divorce 1.7.16
This guide is addressed primarily to courts and legal advisers and should be read in conjunction with the FJC Sorting Out Finances on Divorce aimed at litigants in person and published last month (link for info: https://www.judiciary.gov.uk/wp-content/uploads/2016/04/fjc-financial-needs-april-16-final.pdf). It is intended to increase the consistency across the judiciary in making consistent orders to meet financial needs following divorce and the dissolution of civil partnerships.
The guide focuses on those cases where the available assets do not exceed the parties' needs and sets out how needs should be approached before dealing with duration. The annexes are worth a read if you haven’t read Sorting out Separation (where the cases are drawn from) with worked examples, a section on pensions and another details a range of needs from the common to the more unorthodox (e.g. funding a hobby) with case references for further research.
The 64 page guide can be downloaded from: https://www.judiciary.gov.uk/wp-content/uploads/2013/04/guidance-on-financial-needs-on-divorce-june-2016-2.pdf
(Source: Family Law Week, 4th July 2016)
Arbitration is now available for children matters
The Institute for Family Law Arbitrators has launched a Children Scheme to broaden the appeal of arbitration in family disputes. The scheme will cover all the main children issues facing separating parents, from parental responsibility to where the children will live, how they will spend time with each parent and all other aspects of parent planning. They will also offer arbitration on relocation in England and Wales.
The item in Family Law Week on 27th July 2016 said that more information about the scheme is available at www.ifla.org.uk but there was nothing there as at teatime on 1st August 2016.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
CONSULTATIONS
Recovering child maintenance arrearsThis one is likely to cause a storm. The DWP has launched a consultation on plans to make deduction orders to recover child maintenance arrears from joint bank accounts held by a non-resident parent (i.e. with new partner, other family, friend, etc)
This consultation is for anyone who might be affected by such a power, runs till 25/8/16 and can be accessed at:https://www.gov.uk/government/consultations/child-maintenance-deduction-orders-against-joint-accounts
And another one on child maintenanceThe Work and Pensions Committee has set up an inquiry into the Child Maintenance Service and is inviting written submissions on:
How well the CMS is performing for children and parents and how could it be improved; the problems faced by both parents; the levels of child maintenance; the effectiveness of CMS in service provision and enforcement; the transition from CSA and – this is an interesting one – opportunities for government departments to work together to ensure regular payment. Oh and whether there’s anything we can learn from other countries.
Closing date is 5/9/16 and more information with link to send a written submission can be found at:http://www.parliament.uk/business/committees/committees-a-z/commons-select/work-and-pensions-committee/inquiries/parliament-2015/child-maintenance-16-17/
Mandatory reporting of child abuse and neglectThe Home Office and Department for Education have launched a public consultation about introducing new mandatory reporting and/or a new duty to act on all forms of child abuse and neglect (and possibly extending these to vulnerable adults) alongside the Government's programme of whole system reforms.
The consultation is open to the public and the government is particularly interested to hear from children and young people; social care, education, criminal justice, and healthcare practitioners; the police; and from victims and survivors of child abuse.
The consultation is open until 13th October 2016.
You can access the consultation document at:https://www.gov.uk/government/consultations/reporting-and-acting-on-child-abuse-and-neglect
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
Update on Independent Review into the application of Sharia Law in England and WalesThe review has issued a call for evidence from anyone who has knowledge, expertise or experience on the use of sharia law, especially from those who:
• work or have worked as part of a Sharia Council in the last 5 years• have used a Sharia Council in any capacity in the last 5 years.
Anyone wishing to give evidence can find details about how at the following link: https://www.gov.uk/government/consultations/independent-review-into-sharia-law-call-for-evidenceClosing date 19th August 2016
LEGAL AID UPDATE
Legal Aid contract renewal
Existing legal aid mediation providers have until midnight on 4 th August to confirm that they want to extend their contracts to midnight on 31.3.2018. The contracts for providers not responding by the closing date will end, as planned, at midnight on 31st October 2016.
The aim is have all contracts aligned to the same dates (civil, crime, housing, immigration, etc).
Nothing as yet on issuing new, or extending existing contracts, in the interim. The Agency may be waiting to see if there are any gaps post the 4th August deadline.
Legal aid residence test is unlawful
Did we all know that following the legal aid reforms in LASPO the MOJ decided to introduce further legislation for a residence test for legal aid? This would mean that only people who are at the time of application, and have been for a continuous period of 12 months (with limited exceptions), lawfully resident in the UK, Crown Dependencies or British Overseas Territories can access civil legal aid.
The Divisional Court held that introduction of the residence test was unjustifiably discriminatory. The Court of Appeal overturned that decision. The Supreme Court unanimously decided that the exclusion of a specific group of people from the right to receive legal aid on the ground of personal circumstances or characteristics which have nothing to do with the seriousness of the case or individual need is unlawful because Parliament never contemplated rights to legal aid being removed in that way’. (Family Law Week, 18th July 2016)
So that one is hopefully now closed.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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How to avoid audit errors
Correction and apology: The link published last time to the Legal Aid Agency guide to preventing audit errors didn’t work.
Have tried through the LAA main website on https://www.gov.uk/guidance/legal-aid-agency-audits and the link just produces screeds of gobbledygook so have asked the LAA for assistance. Will let you know, with the link when it’s all up and running again.
Legal Aid Statistics in England and Wales January - March 2016
Remember LASPO (April 2013)? That was when the bottom fell out of the family mediation market, for legal aid providers at least. The Legal Aid Agency statistical analysis suggests recovery is mixed. On the plus side the levels of MIAMs, although fluctuating, are up overall and seem to be stabilizing and on the down side at around only 50% of pre-LASPO levels. Interesting that MIAMs were just a protocol then and are compulsory now…
Mediation starts are at 60% of pre-LASPO level, and of those starting mediation 65% are child only cases. 62% of mediation starts reach successful outcome (LA defined) and highest proportion of agreements (66%) were in child only cases.
The report (bulletin) can be found at: (pages 28 & 29 are the relevant ones):https://www.gov.uk/government/statistics/legal-aid-statistics-quarterly-january-to-march-2016 as can the data zip files and guidance for understanding the data for those interested in looking in more detail.
PERSONAL TAXATION AND WELFARE BENEFITS
Issue 3 will be focused on setting a baseline for Welfare Benefits and Personal Taxation.
In the meantime those of us doing financial cases need to remember that clients who are not selling and dividing their property straight away may fall into the stamp duty changes implemented from April 2016.
Stamp duty
Designed for people buying second homes and rental properties, separating couples who want one partner to retain the home whilst keeping the other on the deeds will also be covered if the leaver goes on to purchase their own property whilst still co-owning the FFH (as the leaver will technically be buying a second home). If they do so they will be liable to pay an additional 3% in stamp duty (SDLT) over and above the existing rates, which are tiered.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
This means:3% on the first £125,000 of the purchase price (0%)5% on any balance between £125,001 and £250,000 (2%)8% on any balance between £250,001 and £925,000 (5%)13% on any balance between £925,001 and £1.5 million (10%)15% on any balance over £1.5 million (12%)
The figures in brackets are the SDLT rates for a first residence. So, for example, someone purchasing a home for £300,000 would pay 3% of the first £125,000, 5% on the next £125,000 and 8% of the remaining £50,000 – a total of £14,000 -compared to £5,000 if it were their only home.
Refunds
If the former home is sold or the leaver’s name taken off the deeds within 36 months of the leaver purchasing a home they will become eligible for a refund of the amount of SDLT paid above what would have been charged had the property not been an additional residential property. A refund must be claimed within 3 months of the sale of the previous main residence or within 12 months of the filing date of the return, whichever comes later.
(Sources: Olivia Rudgard, Daily Telegraph, 30th June 2016, HM Government on https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property, 16th March 2016 and HM Government on https://www.gov.uk/stamp-duty-land-tax, 1st April 2016)
PENSIONS REFRESH AND UPDATE
Pensions can be complicated and the key things mediators need to know are why they are relevant, what types of pensions there are, the range of pension options on divorce/dissolution, how pensions are valued, recent changes that may impact on mediation (Pension Act 2014 – single state pension and Budget 14 - pensions freedoms) and where to send clients to seek pensions advice.
Why pensions are relevant
When clients divorce or dissolve their civil partnership the Court takes pensions into account as assets of the marriage. This is because they are savings from the family pot, although they are held in individual names because of the particular tax advantages associated with them. Both clients will need to provide the Court (however they do their settlement) with their pension values and/or benefits. There is currently no legal mechanism for pension division with co-habiting couples who separate – so if they are of a mind to take pensions into account, offsetting is their only option.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Different types of pension
There are 4 different types of pension:
Defined benefit Defined contribution Basic state pension Additional state pension
Defined benefit – based on salary and length of serviceOften known as final salary pensions, these are nearly always workplace pensions arranged by an employer. The amount of pension to be paid depends on salary, length of service and a calculation made under the rules of the scheme. The provider guarantees a certain amount each year on retirement.
Defined contribution – based on money paid inThey may be one of a range of personal or workplace pensions where the pension provider puts the money paid in into investments. The amount of pension to be paid depends on how much was paid in and how well the investments have done. The value of the pot can go up or down depending on the investments.
The State Pension – based on national insurance contributionsThe pension from the Government on retirement is the State Pension which is payable when people reach state pension age. It is not paid automatically it has to be claimed.
Additional State Pension – based on earningsThe additional state pension, also known as S2P and previously SERPS no longer exists, in terms of making contributions, from 6th April 2016.
Ways of dealing with pensions
Pension offsettingIn the beginning there was offsetting. This is the process whereby the value of some or all pensions is offset against other assets. Great if there are other assets enough to do it, not so good if not.There are also potential issues about whether the offset assets will provide security into retirement and how this will work.
In 1995 the Pensions Act attempted to address these issues with the introduction of Pension Earmarking (now called Pension Attachment)
Pension attachment (earmarking)
This allows a proportion of a member’s pension rights to be earmarked for the benefit of an ex spouse. This may be part of the lump sum, the income or both. However it does not become payable to the ex until the pension holder starts to draw it and the pension also stops on the death of the pension holder.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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The legislation was subsumed into the Welfare Reform and Pension Act 1999 and the mechanism for earmarking in England, Wales and Northern Ireland is a now a Pension Attachment Order (PAO). The original drawbacks remain and the new pension freedoms outlined below add further issues.
Pension sharingThe Welfare Reform and Pension Act 1999, implemented in December 2000, revised the earmarking legislation and introduced the option of pension sharing. This allows a proportion of one or more pensions to be transferred to a separate pension in the ex partner’s own name – either within the same scheme or in a separate scheme (which may need to be set up).
It is possible to defer a pension share order or a pension lump sum order (useful if the holder has retired and the ex is some way off) but this is complicated, can be expensive, risks clawbacks of pension payments made before the sharing order is implemented and is something clients definitely need to seek specialist advice about if they are considering it.
State and additional state pensionsFrom 6th April 2016 it is no longer possible for a spouse’s full national insurance record to be used to top up missing years on divorce/dissolution.
However it is still possible to share or offset any accumulated additional state pension (S2P or its predecessor SERPS).
Valuing pensions
Only the person who is a member of the pension scheme, or who has taken out the pension, can apply to the scheme for a valuation.
The Welfare Reform and Pensions Act 1999, effective 1st December 2000, prescribed the cash equivalent transfer value (CETV) as the method of pension valuation for divorce. This is the amount that would be available to move a pension elsewhere. It is often less than the ‘fund value’ of the pension because it will include charges for transferring. Pension providers are required to provide one per year free of charge.The CETV provides an accurate valuation for defined contribution schemes. However, for defined benefit schemes the CETV rarely provides an accurate valuation because there is no fund value for the member. The retirement benefits in these pensions are based on an actuarial calculation, which includes years of service and final salary – and the CETV assumes that the member is leaving the scheme at the time of the divorce. Whilst the CETV provides a good starting point the legislation recognises that additional information is likely to be required with these schemes.
It is also worth noting that the Teachers' Pension Scheme (and maybe others) are offering either an express valuation or a full CETV and if both are requested they are charging for the CETV.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Given that this is a complex area it is worth getting clients to seek expert help from an actuary or a financial adviser who specialises in divorce or dissolution.
As a guideline Bradshaw Dixon Moore provide express valuations of defined benefit schemes for £70 + VAT (if the pension is not in payment) and £100 + VAT (if the pension is in payment). They also provide Pension Offset and Pension Share Reports from £880 + VAT each. More information is available on their website at: http://bradshawdixonmoore.com
Other sources for pensions advice and advisors for clients are:
The Money Advice Service at: https://www.moneyadviceservice.org.uk/en/articles/choosing-a-financial-adviserThe Pensions Advisory Service at:http://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/top-tips-for-your-pension/choosing-an-ifa
The State PensionAlthough it doesn’t have a value as such, clients aged 16+ and more than 30 days from retirement can apply for their estimated state pension either on line at:https://www.tax.service.gov.uk/check-your-state-pensionOr by using the form BR19, downloadable at:https://www.gov.uk/government/publications/application-for-a-state-pension-statement
Clients who have been paying into the additional state pension (also known as state second pension/S2P and previously SERPS) will automatically have their state pension uplifted with any relevant amounts, so the pension valuation will be inclusive of those.
However, on divorce/dissolution the value of any additional state pension can be taken into account in the same way as other pensions, therefore a CETV should be applied for. If the additional state pension is shared it is likely to affect the State Pension forecast once implemented (see above). Valuations are applied for on a form BR20, downloadable at:https://www.gov.uk/government/publications/application-for-a-state-pension-forecast-on-divorce-or-dissolution-br20
Significant recent pension changes
The two big pension changes in recent years to impact on mediation are:
Pension Act 2014 Budget 2014 (implemented from 6.4.15)
Pension Act 2014The key provisions relevant to mediation in the Pensions Act 2014 were the introduction from 6th April 2016 of the single-tier state pension to replace the old Basic and Additional State Pensions and bringing forward the planned increase in the state pension age to 67.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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The new system provides a higher flat rate pension for those who are eligible (see below) and affects those reaching state pension age on or after 6th April 2016. Those reaching pension age before that date will continue to be covered by the old rules.
Credits towards the State Pension can no longer be transferred on divorce/dissolution although any additional state pension accrued can still be shared.
State Pension Age (SPA)State pension age has been a bit of a moveable feast in recent years.
Traditionally women reached state pension age at the age of 60 and men at the age of 65. Under the Pensions Act 1995, women’s SPA was due to be equalised with men’s, rising from 60 in 2010 to 65 by 2020. The Pensions Act 2007 set out a timetable for increasing the SPA for both men and women to 66 by 2026, 67 by 2036 and 68 by 2046. The Pensions Act 2011 brought forward the increase in SPA to 65 for women and revised the phasing arrangements. The Pensions Act 2014 brought the age increase from 66 to 67 forward as well as setting out the phasing arrangements for those reaching SPA at 66.
Currently women born before 6th December 1953 can still retire before the age of 65 (in some cases just) and the State Pension age for men born before that date is 65. Both men and women born after that date will reach state retirement age between 66 and 67 (born between 6.4.1953 and 5.4.1961), 67 (born between 6.4.1961 and 5.4.1969) and 68 (born on or after 5.4.1969).Clients can check their State Pension age using the following link:https://www.gov.uk/state-pension-age
The Government has made a commitment to review the state pension age every five years and the first review is in progress.
State pension amounts and eligibility
The state pension for those retiring before 6th April 2016 is: £119.30The new flat rate state pension is: £155.65 – although it is anticipated it will take until 2040 for the changes to work through so that this is the standard rate for all. Clients should be encouraged to check their particular record.
Eligibility for the full flat rate state pension is 35 qualifying years of NI payments during a working life. Eligibility for any level of the new state pension is 10 qualifying years of NI payments during a working life. Those with fewer than 10 qualifying years will not be entitled to payment of the single tier pension but should be entitled to pension credit.
Qualifying years can be built up through paying NI at work, or through National Insurance credits which are automatically provided, for example, for people on benefits, for time spent raising a family (NI automatically credited to the recipient of child benefit until the [youngest] child is age 12]; carers and those in government approved training.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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The most vulnerable clients will be those with one job earning less than the NI Lower Earnings Limit (currently £112 a week), or with several jobs earning less than the LEL in each and not receiving any NI crediting benefits. They will not be accruing credits and will need to check out making voluntary contributions. The self employed too – if they are not making Class 2 NI contributions (currently £2.80 per week) because their annual profits are below £5,965, will not be contributing to their state pension qualifying years.
Budget 2014 – Pension freedoms
The pension freedoms introduced on 6th April 2015 made earmarking singularly unattractive but otherwise will impact on mediation only with certain groups and circumstances.
The groups are those nearing their mid-50s or older but not yet retired and the circumstances are where the benefits of cash in the hand now will outweigh the risks of reduced finance into retirement.
Pension reform – freedom and choice
In April 2015, the tax rules were changed to give people aged 55 or above greater access to their pensions. This age will go up in future in line with state pension age. Drawdown of pension income is now taxed at marginal income tax rates rather than the previous rate of 55% for full withdrawals; the tax-free lump sum continues to be available (up to 25%); and free and impartial advice is available via Pension Wise (https://www.pensionwise.gov.uk) to support people’s decision making about the choices that reflect their needs in retirement.
The freedoms involve six options:
leaving the pension pot untouched purchasing an annuity getting an adjustable income (Flexi Access Drawdown) taking cash in chunks (Uncrystallised Funds Pension Lump Sum) cashing in the whole pot in one go mixing any of the options.
(Source: Pensions Advisory Service, more detail on each of the options is available at: http://www.pensionsadvisoryservice.org.uk/about-pensions/pension-reform/freedom-and-choice)
HOWEVER…
Defined benefit schemesThe pension freedoms do not apply to defined benefit schemes.
It is possible to transfer funds from a defined benefit scheme to a defined contribution scheme to take advantage of the flexibilities provided that the scheme allows it, is contributory, that both employee and employer have stopped contributing and that the pension is not in payment.
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
Given that a transfer out is likely to be disadvantageous for many, people will generally be required to take independent financial advice before being allowed to transfer. Scheme members will be expected to meet the cost of this advice and the Money Advice Service has a directory of authorised financial advisers at: https://directory.moneyadviceservice.org.uk/en
Pension Wise only provides guidance on what people can do with a defined contribution pension. Guidance and a factsheet on the new pension freedoms and defined benefit schemes can be found on the Pensions Advisory Service website at:http://www.pensionsadvisoryservice.org.uk/content/publications-files/uploads/DB_Options_Pension_Flex_SPOT024_V1.pdf
Pension Protection Fund (PPF) – defined benefit schemes
Increasing numbers of clients seem to be falling into the Pension Protection Fund. This was established in April 2005 to pay compensatory pensions to members of eligible defined benefit pension schemes when there is a qualifying insolvency event in relation to the employer and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation.
Once a pension has gone into the PPF valuation is by way of a compensation equivalent value (CEV) and will need to be paid for. If a PPF pension is to be shared the relevant instrument is a Compensation Sharing Order rather than a Pension Sharing one. Credits shared within the PPF cannot be transferred out of the scheme.
If you’d like to learn a whole new alphabet and find out more about Pension and Compensation Sharing following divorce please see:http://www.pensionprotectionfund.org.uk/DocumentLibrary/Documents/TN_Nov2013.pdf
Sources and resources:
The Pensions Advisory Service (TPAS) – free and impartial guidance to people with workplace and personal pensions.http://www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change/when-relationships-end
Pension Wise – a free and impartial government service offering guidance about pension optionshttps://www.pensionwise.gov.uk/divorce
The Money Advice Service – free and impartial advice about all aspects of money and finance, including calculatorshttps://www.moneyadviceservice.org.uk/en/articles/dividing-pensions-on-divorce-or-dissolution
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
Pension Protection Fundhttp://www.pensionprotectionfund.org.uk/Pages/homepage.aspx
CONFERENCES AND COURSES
TAKING BOOKINGS NOW
September 2016
Family Mediators Association Annual Conference, 20th – 21st September 2016, Oxford. Both days £250 + VAT, one day £165 + VAT (members); both days £315 (+VAT), one day £ £205 + VAT (non-members). Details and booking at:http://thefma.co.uk/courses/fma-annual-conference-2016/
Mediation Associates Brain Sex and Mediation, 29th September 2016, Newcastle area, £140. Flyer attached with booking details, or:To book email: [email protected] or ring 0191 908 8693
CMP Resolutions (College of Mediators approved) Mediation Masterclass, 30th September 2016, London, £350 + VAT (Provider: CMP Resolutions). Details and booking at:http://cmpresolutions.co.uk/product/mediation-masterclass/
CMP Resolutions (College of Mediators approved) Mediation Reboot (Refresher course), 30th September 2016, London, £350 + VAT (Provider: CMP Resolutions). Details and booking at:http://cmpresolutions.co.uk/product/mediation-reboot/
October 2016
Family Mediators Association Family Mediation Council Accreditation – The new FMCA, 12th October 2016, Leeds (for PPCs and mediators working on portfolio building). £240 + VAT (members); £310 + VAT (non-members). Details and booking at:http://thefma.co.uk/courses/family-mediation-council-accreditation-the-new-fmca/
Resolution Dispute Resolution Conference 2016, 13th and 14th October 2016, Nottingham. From £264 (members); £288 (non-members) for the Friday only to £384 (members) and £408 (non-members) for Thursday and Friday. Other combinations available and priced separately. Prices include VAT. Details and booking form at: http://www.resolution.org.uk/site_content_files/files/dr_conf_2016_flyer.pdf
Family Mediators Association PPC Update of Theory and Practice, 17th October 2016, Manchester (5 PPC CPD points). £240 + VAT (members); £310 + VAT (non-members). Details and booking at:http://thefma.co.uk/courses/ppc-update-of-theory-and-practice/
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
Family Mediators Association Neuro-linguistic programming (NLP), 18th October 2016, Leeds. £240 + VAT (members); £310 + VAT (non-members). Details and booking at:http://thefma.co.uk/courses/nlp/
Resolution PPC Foundation Training (12 PPC CPD points), 24th and 25th October 2016, London. £540 (members); £564 (non-members). Prices include VAT. Details and booking at: http://www.resolution.org.uk/site_content_files/files/ppc_ft.pdf
November 2016
Family Mediators Association Direct Consultation with Children (DCC), 3rd and 4th November 2016, Leeds.£490 + VAT (members); £560 + VAT (non-members). Details and booking at:http://thefma.co.uk/courses/direct-consultation-with-children-dcc/
Family Mediators Association Relational Mediation, 8th November 2016, London £240 + VAT (members); £310 + VAT (non-members). Details and booking at:http://thefma.co.uk/courses/relation-mediation/
Resolution National Cohabitation Debate, 10th November 2016 (6.30 – 8 p.m then drinks and canapés), London. £36 (members); £46 (non-members). Prices include VAT. Details and booking at: http://www.resolution.org.uk/site_content_files/files/national_cohabitation_debate_booking_form.pdf
Resolution PPC Networking Day (6 PPC CPD points), 15th November 2016, London. £240 (members); £264 (non-members). Prices include VAT. Details and booking at: http://www.resolution.org.uk/site_content_files/files/ppc_networking.pdf
CMP Resolutions (College of Mediators approved) Mediation and Mental Health, 17 th November 2016, London, £340 + VAT (Provider: CMP Resolutions). Details and booking at:http://cmpresolutions.co.uk/product/mediation-and-mental-health/
Family Mediators Association Using Cognitive Analytic Therapy Concepts to Resolve Conflict 18th November 2016, Leeds. £240 + VAT (members); £310 + VAT (non-members). Details and booking at:http://thefma.co.uk/courses/using-cognitive-analytic-therapy-concepts-to-resolve-conflict/
Family Mediators Association Summary Writing, 21st November 2016, Leeds. £240 + VAT (members); £310 + VAT (non-members). Details and booking at:http://thefma.co.uk/courses/summary-writing/
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
FORTHCOMING
College of Mediators PPC Conference: Defining our Voice as PPCs, 22nd September 2016, Loughborough University (5 PPC CPD points) – no booking details as yet…
National Family Mediation Legal Update, 29th September 2016, Birmingham – no booking details as yet…
National Family Mediation Legal Update, 5th October 2016, York – no booking details as yet…
National Family Mediation Legal Update, 11th October 2016, London – no booking details as yet…
Resolution Dispute Resolution Conference 2016, 13th - 14th October, Nottingham
National Family Mediation Legal Update, 20th October, Bristol – no booking details as yet…
College of Mediators Annual General Meeting Event, 8th November 2016, Bristol. A day of workshops and networking for College members – no booking details as yet…
College of Mediators Annual Conference 2017: ‘Mediation, Coming of Age’, 15th June 2017, London – no booking details as yet…
NON MEDIATION SPECIFIC
Anyone London or South East based might like to check outThe School of Life for a range of half day, full day and evening workshops and courses at:http://www.theschooloflife.com/london/shop/calendar
ONLINE COURSES
Safeguarding
Child Protection: An introduction course, NSPCC, £20 (unclear whether VAT is added). Details at:https://www.nspcc.org.uk/what-you-can-do/get-expert-training/child-protection-introduction/
Safeguarding Everyone - Protecting Children, Young People and Adults at Risk, Online Training Solutions £30 + VAT. Details at:http://www.virtual-college.co.uk/products/safeguarding-everyone.aspx
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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Issue 2 Family Mediator Monthly July 2016
Safeguarding Children Refresher, Online Training Solutions £30 + VAT. Details at:http://www.virtual-college.co.uk/products/safeguarding-children-refresher-training.aspx
Introduction to Safeguarding Children Training Course, High Speed Training £30 + VAT. Details at:http://www.highspeedtraining.co.uk/safeguarding-people/introduction-to-safeguarding-children-training-course.aspx
Introduction to Safeguarding Children Refresher Training, High Speed Training £30 + VAT. Details at:http://www.highspeedtraining.co.uk/safeguarding-people/introduction-to-safeguarding-children-refresher-training-course.aspx
Domestic abuse
Overview - Awareness of Domestic Violence and Abuse, Online Training Solutions £30 + VAT. Details at:http://www.virtual-college.co.uk/products/impact-children.aspx
QUESTIONS AND ANSWERS
If you have any questions about the above, or any other aspect of updating or other CPD please email: [email protected]. Responses will be published the following month, or as soon as an answer can be found…
Affordable CPD, 1 Shorts Road, Carshalton, Surrey SM5 2PB Email: [email protected] subscription to Family Mediator Monthly provides at least 6 hours of relevant updating CPD each year
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