Family Law and Pension Changes

Family Law and Pension Changes

The changes

Those with a defined contribution pension heading towards retirement will now be able to take their whole pension pot as a lump sum rather than buying an annuity which pays out an income over time. This means there are a whole host of options for those aged over 55 to invest this cash. Some people with a defined benefit pension will also be able to swap this for a defined contribution scheme to take advantage of these new freedoms. 

Lamborghini time?

Some may wish to splash out all their cash on a Lamborghini, as one minister famously said. But, anyone who's been prudently saving for their future over the course of their working life is unlikely to see this as a sensible option. Indeed, research from prudential suggests just two per cent of people are even considering blowing their pension pot on purchases.


Other than the unlikely blowout on a Lamborghini, there are other risks to be aware of. One think tank has warned that people may not buy the right pension product that will serve them properly throughout their whole retirement, while others may be susceptible to fraudsters. A group of leading MPs have called for a new regulator to specifically oversee the new pensions market to protect pensioners.


The first 25 per cent of the pension lump sum, or smaller amounts, are tax free. Anything over this will be taxed at normal income rates along with any other earnings from elsewhere. If this totals more than £42,386, then this could take you into the higher 40 per cent tax bracket. Another think tank has warned people to be careful of this potential tax trap.


The government is offering guidance on pension changes and retirement options through the Pension Wise scheme, though it will not be advice on specific products or technical advice.

The service, launched just two weeks before the changes come in, has received less promotion than may normally be expected for such a major shake-up due to the rules of "purdah" during the run up to the General Election.

While the changes do come into effect on Monday, those heading into retirement do not have to make a decision straight away on which option they will go for, and many may still stick with an annuity.

Our team of family solicitors at Garratts can give you advice about your rights on a breakdown of your relationship.

The Pension asset is now one that spouses can access at age 55 so it is important that each spouse gets expert advice in this complicated area to protect what is often the most valuable asset in a marriage after the family home. We offer a range of options for our services but our discounted first interview allows you to receive clear advice followed by a comprehensive letter setting out our advice and what your rights a spouse are. Ring any member of our family team on 0161 665 3502 to arrange an appointment.

  • Share This Story


Personal Injury
Mental Health Review Accreditation
Children Law
Criminal Defence Service

Call Back Request

Before submitting this form please read our contact privacy policy