In response to this I asked him why, when he has worked for his company for 21 years and is due his pension, but he confessed that he has accessed the pension early and all the money is gone (gambler).
Retirement savings gone: Married couples hold assets like pensions separately, but what happens if one partner gambles the money away?
This is the final straw for me and I am now going to pursue a divorce.
I just want to know if he would have had to have my signature or permission to access his pension early, and even though the money is likely all gone would a judge award me half of a pension that no longer exists via a higher share of the equity in the house?
My father made a mystery ‘daughter’ his heir, left money to..
Rhys Taylor is a barrister specialising in matrimonial finance claims who practises from chambers in Cardiff and London.
He is a co-author of Pensions on Divorce: A Practitioner’s Guide. He replies:
I am very sorry to hear about your situation and I am afraid that there are no particularly comforting words I can offer.
I will go through the issues your question raises, and your possible options below.
Rhys Taylor: It is likely that gambling away all retirement savings would be seen as being a ‘wanton dissipation’
How spouses hold assets in England and Wales
In England and Wales, unlike some other jurisdictions, married couples each hold their own assets separately.
Spouses are free to have joint assets, for example, a bank account, but unless they actively opt into joint assets, the starting point here is that each spouse owns their own assets.
You may have had some benefits as a spouse, for instance upon his death, but those would only kick in upon death and do not alter the primary fact that your husband’s pension was his own to do with as he pleases.
If it was a final salary pension, in order to cash it out as he has done, he would have had to obtain the advice and assistance of a financial adviser, as this is compulsory when such pensions are worth £30,000 or more.
However, he could have faced a tax bill if he withdrew more than the 25 per cent tax-free lump sum, as beyond that the money taken out plus his earnings would be subject to income tax.
Asset split: Pensions are often worth more than houses (Stock image)
If he took out money before he was 55, the taxman would have levied a very heavy penalty.
The early cashing out of this pension appears to have been a very poor life decision on the part of your husband and it might be (I put it no higher than that) that your husband would have some recourse against the financial adviser for the quality of the advice he received (if he moved a final salary pension into a defined contribution pension).
You mention that you appear to have conducted a clandestine search of his paperwork.
If you have taken a copy I would advise you to destroy it. If you have retained originals, these should be returned to him.
You are 62 and do not say that you earn any money yourself and so I do not expect that you can pay off the mortgage via any income source of your own.
After a long marriage a court will conventionally split the assets 50/50 and so you would each start with a notional expectation of £47,500.
The trade-off is not on a like-for-like basis.
To access pension assets, after the conventional 25 per cent tax free sum has been drawn down, the recipient must pay income tax on their pension withdrawals and any other earnings, as explained above.
jpg” /> I kept my final salary pension, but my colleagues are taking pots worth hundr of thousands – did I make a big mistake? Does caring for parents aged in their 90s qualify me for extra state pension top-ups? Why has my late daughter ‘lost’ her DHL pension, which she paid into for nearly two years? If you move in with someone too ill to cope alone, do you risk losing your widow’s pension? If my pension fund keeps growing after I retire, can I have extra bites of the 25% tax-free lump sum? Can I avoid drawing a private pension so I can keep my pension credit? My husband worked 20 hours a week while on pension credit – could he get in trouble over it? I’ve been offered the chance to transfer INTO a final salary pension, should I take it? I want to cash in an old pension but still pay into the civil service scheme: Is this allowed? I want to take a 25% lump sum and leave the rest of my pension where it is – why am I being told no?
In some limited circumstances the courts are prepared to take ‘gross and obvious’ financial misconduct into account, in deciding whether it should depart from a 50/50 split and ‘add back’ some or all that has been found to be ‘wantonly dissipated’.
The cases where the court has been prepared to do this are quite rare and one judge referred to the conduct needing to have a ‘gasp’ rather than merely a ‘gulp’ factor before it would be taken into account.
It is likely that gambling away all retirement savings would be seen as being a wanton dissipation with the requisite gasp factor.
But that is not the end of the matter, I am afraid.
The court, when exercising a discretion as to how to weigh the conduct, will take into account all the circumstances of the case, including the ne of both parties.
In a case where the assets are plentiful, there may be enough fat to conduct an ‘add back’ exercise and leave each party with an unequal amount, which will nevertheless be enough to rehouse them both.
However, in this case, I am afraid, there is very modest equity and you would be lucky to get a property for £95,000, subject to where you live in the country.
However, there will be retirement flats available to you which will be under £100,000 subject to where you are prepared to live.
It is most unlikely that £47,500 would enable you to move into privately owned accommodation.
There has to be a real risk that the court would say that there is simply not enough money here to “add back” a sum of money which has been spent.
The court may well make some adjustment away from 50/50, to reflect what your husband has done, but it is likely that the court may award him something to get on with his life with and to help meet his ne.
The exact outcome would be a matter for discretion for a judge who deals with this case.
If I were you I would be exploring whether you can rehouse yourself for £95,000 or less.
If that is possible, you would be free to suggest that you have all of the capital (but this may be considered to be an optimistic outcome from your point of view) or that any capital due to your husband should be deferred in its payment to him, with you offering him a charge over your next property for what he may be entitled to in due course.
This would mean that he gets his money upon some future trigger event.
Traditionally such triggers would be your death or re-marriage.
You refer to yourself as a housewife and so I do not know whether you have a history of work which would have enabled you to accumulate a full National Insurance contribution history, to justify a full state pension.
If your husband made additional contributions towards a second state pension in the past it may be possible to seek a pension sharing order against any ‘extra’ payments he receives in respect of that.
How this might happen depends on whether he is in the old or new state pension and, whilst you give your age, you do not disclose his age, which would determine what state pension scheme applies to him, so I am unable to assist further in this regard.
What should you do now?
Please note that nothing I have said above is formal legal advice and it should not be relied upon as such. I can accept no responsibility for any acts or forbearance taken in light of this.
The information provided by our expert is illustrative and for the purposes of this article. Nothing in this response constitutes personal legal advice.
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