THE BUDGET, PENSIONS & DIVORCE
Divorce has always had the potential to be seriously damaging to financial health but now wealthy individuals will be unable to replenish their pension pots because of “the Revenue’s rigid interpretation of new pension limits provisions”, according to The Sunday Times.
In the December Budget, pension funds were capped at €2.3m for an individual taxpayer and Revenue is taking the view this threshold must take account of any pension settlements made with former spouses.
Leading lawyer Paul Gilmer of Independent Trustee Company details a case whereby a client, 43, who shared €1.8m pension with a former spouse.
“The court made a judgment for 50% to be awarded to the estranged spouse, which is not unusual,” Gilmer said. “One would think the client would be able to rebuild the remaining fund back up to the €2.3m cap, but Revenue’s view is that the monies conferred on the estranged spouse must be taken into account.”
This means that allowing for a €900,000 divorce settlement, the client’s pension fund cannot now exceed €1.4m.
“In the past, the most heated debates in marital breakdowns tended to relate to family homes,” Gilmer said. “In the current economic situation, however, pensions are often the only assets worth fighting over.”