After the pension changes in April, those with pensions can take lump sums out in cash.
However, this has led to an unfortunate and unintended consequence in that if the party with the pension does just that, there may be nothing left to pay out to former partners who were allocated a share of that pension under an earmarking order in a divorce settlement. Earmarking orders were popular with couples who split up more than 15 years ago - the saver kept control of the pension while the pension income was shared.
A spokesman for the Department for Work & Pensions says “Where people have entered into a legal arrangement to give some of their pension saving to another person, then this must be honoured.’ It adds that it will ‘crack down’ on anyone using the loophole. It is also looking to change the rules.