In judicial separation proceedings the partner will obtain
from the court a decree of judicial separation and this means
a legal separation of the partners although they will still
be married but not have to live together whereas in divorce
nisi followed by the decree
absolute is required before the proceedings are final.
A decree of judicial separation will only be granted, as with
on the grounds that the marriage has irretrievably broken
down. The partner must prove; adultery of the other partner;
unreasonable behaviour of the other partner; desertion by
the other partner after two years; separation with consent
after two years; and separation without consent after five
years. As with nullity,
judicial separation can be granted within 12 months of the
However, before the court grants a decree of judicial separation
it will have to establish that the arrangements the partners
have made for the children, if any, are acceptable to the
court. Judicial separation will allow the partners to apply
for a court order to settle disputes of children, matrimonial
assets or financial matters during ancillary relief proceedings,
such as an earmarking
order issued against the members pension rights within
a pension arrangement of the other partner, however, a pension
sharing order will only apply to divorce or nullity.
your customer rule
The requirement of the adviser to evaluate an existing or
prospective client's circumstances and investment objectives
as would be reasonably expected in order to provide the best
advice to the customer.
In many situations a party to the divorce will not have the
income to pay for legal costs, although there is value in
the matrimonial assets. Legal Aid can therefore provide the
funds to the party until the matrimonial
assets are divided or sold. Ultimately, the cost of Legal
Aid is paid for by the taxpayer.
It is usually the case that the husband will be in full time
employment and the wife is at home looking after the children
and has no income of her own. Therefore, the wife can successfully
apply for Legal Aid whereas her husband must pay for the legal
costs out of his income.
If the Legal Aid applicant is not successful, there will be
no requirement to repay the associated costs. On divorce the matrimonial home is usually the largest asset and if the
Legal Aid applicant is successful, some of the costs are then
exempt, currently £3,000. Anything in excess of this
amount can be recovered by the Legal Services Commission by
applying a charge against the property. This means the cost
of legal advice is deferred until the property is sold.
Legal Aid also applies for fees associated with the valuation of pension
arrangements. Whilst each application for Legal Aid is
considered by the Legal Services Commission on its own merits,
the Legal Services Commission has agreed to cover fees for
a pension audit service on a fixed fee basis.
At retirement an individual can select a level income for
both a pension
annuity (compulsory purchase annuity) or where they have a lump sum a purchased
If the individual has a pension fund they can buy an annuity and have the option to use an open market option to search for the highest pension annuity, adding all the features necessary such as an income on a level basis. Once you have purchased an annuity it cannot be changed, so learn more about annuities, compare annuity rates and before making a decision at retirement, secure a personalised pension annuities quote offering guaranteed rates.
By purchasing a level annuity income, an annuitant will receive
a greater income initially than if they purchase an annuity
escalation or fixed
rate escalation. If inflation remains low, it could take
more than 20 years for an annuity with escalation matches
the return from a level annuity. An alternative would be a with profits
annuity where the annuitant can select an income that
matches the level annuity income, but could still increase
in the future if bonus declared are higher than the Anticipated
Bonus Rate (ABR)
selected by the annuitant.
By choosing a level annuity, if the annuitant is aged 65 and
dies at the age of 85, there would be no difference between
a level and escalating annuity at current rates of inflation.
However, if inflation rises during this time then this could significantly reduce
the buying power of a level annuity income and hence reduce
the annuitant's standard of living.
A sum assured on the life of an individual usually as a spouses
benefit or defendants benefit and payable on death of the
life assured. This is known as death in service benefit when
provided in addition to a final
on the pension simplification rules from April 2006, a lifetime allowance is the maximum amount of pension savings
that can benefit from tax relief and has been initially set
at £1.5 million. This figure will rise over time and
the proposed amounts are as follows:
||2007 - £1.6 million
||2008 - £1.65 million
||2009 - £1.75 million
||2010 - £1.8 million
The standard lifetime allowance is based on the approximate
amount of money that would be needed to purchase a pension equal
to the maximum HM Revenue & Customs (HMRC) would permit
under the tax regime. Funds in excess of the lifetime allowance
are felt to have benefited unduly from pension scheme tax advantages
and therefore a tax charge is made.
Funds that exceed the lifetime allowance can be taken as a lump
sum and in this case the lifetime allowance charge would be
at 55%. There is a lifetime allowance charge of 25% on pension
funds that exceed the lifetime allowance and are used to provide
a pension income. The income would also be subject to income
tax at the individuals marginal rate and probably this would
be a 40% higher rate tax, therefore the likely overall effect
would be a tax rate of 55%.
All approved schemes and exempt approved schemes such as final
salary and money purchase occupational pension schemes that
are contracted out and contracted in, must escalate pension
income from retirement
age at limited price indexation (LPI).
Protection from inflation is provided by LPI at the retail
price index (RPI) with a 5.0% ceiling. LPI applies from 6
April 1997 and includes protected
rights benefits from contracted out final salary pensions
as well as personal pensions in respect of Department of Social
Security (DSS) rebates for the 1997/1998 tax year onwards.
Many people with elderly relatives are aware that long term
care is a problem and has many associated costs. These costs
can quickly erode assets such as savings and the family home. Long
term care costs can vary significantly for different locations
in the United Kingdom and for residential care or nursing
Residential care may cost an average from £13,400 to
£16,400 depending on the location in the UK, whereas
nursing care could cost an average from £16,700 to £24,400
depending on the location in the UK.
According to the ABI, in the UK there are 9 million people
over the age of 65. Of those aged over 70 approximately 20%
receive some form of home assistance and 4% receive home assistance
on a continuous basis. There are 500,000 people in residential
care and the total cost of long term care in 2001 exceeded
If the individual has a medical condition and can no longer
look after themselves, state
benefits could be payable to contribute to the cost of
long term care, whether the individual is still at home or
in a nursing home. To qualify for other benefits to fund long
term care, means
testing is used to evaluate the individual.
Where the assets of the individual are less than £12,250
in England (£11,750 in Scotland and £13,500 in
Wales) all the funding for long term care can be provided
by the Local Authority or in the case of a major medical
condition, by NHS funding. Where the assets are greater
than £20,000 in England no funding is provided by the
Local Authority but it may be possible to receive partial NHS
funding. Partial funding by the NHS is determined by the
local primary care trust using nursing
care bands. Once all benefits are considered, any shortfall
must then be met by the individual although by using an immediate
needs annuity this long term care cost can be capped.
A tax free lump sum payment commuted to cash from a pension
scheme fund, normally paid when the pension is drawn on the
first day of retirement. For a defined contribution scheme
such as personal or stakeholder pension and money purchase
scheme the tax
free lump sum is currently 25.0% of the fund value.
Since Pension Simplification from 6 April 2006, all pensions
can commute tax free cash on the 25.0% of fund value basis
including an occupational final salary and money purchase
Previous to A-Day this lump sum was derived from a formula
based on the members final
remuneration and number of years in employment. This would
be either 2.25 times the pension income at retirement age
or, if greater, 3/80ths for each year of service up to retirement
times the final remuneration for the year up to a maximum
of 1.5 times final remuneration.
sum death benefit
Associated with occupational pension schemes are lump sum
death benefits. In the event of the death of a scheme member,
a tax free lump sum will be paid to the beneficiary that is
usually the spouse. In small to medium size companies this death in
service benefit is offered through a life assurance arrangement
that is separate from the company pension scheme.
In large companies the scheme will self-insure the risk. The
benefit is calculated as a multiple of basic salary and is
typically four times but could be as low as two or as high
as ten depending on the scheme rules. On death this lump sum
will be paid to the beneficiary free of tax.