Farmers with pensions invested in their own farming assets are being warned to take extra precautions against divorce after pension rule changes.
Pensioners are now able to withdraw their personal pension in cash without the need to buy an annuity. People can withdraw up to 25% of their pension pot tax-free and all of their funds subject to paying income tax.
The change also applies to self-invested personal pensions (SIPP), which allow the pension holder to invest in a range of assets.
Alastair MacLeod, senior associate at solicitors Clarke Willmott, said many farmers had SIPPs invested in farm assets like land and buildings.
With the pension changes, these farmers could be forced to sell their farm assets if a divorce resulted in an order to share the pension with their spouse and the spouse then wanted to withdraw money, said Mr MacLeod.
He said that normally, divorced spouses were content to receive a proportion of their ex-partner’s pension as normal pension payments as well as their share of any assets.
But the ability to withdraw pension money in cash, meant that spouses may now look to realise the value of a fund as well.
After a pension sharing order is granted, a spouse could ask for this money at any time after the divorce, potentially forcing the break-up of farming assets to fund the payout.
Mr McLeod said advisers were waiting to see how the changes played out, but that if farmers had any concerns about their marriage and were considering pension options, they might want to think about alternative routes to SIPPs.