The abolition of the safeguarded rights legislation on 6 April 2009 will benefit divorced people, in particular women, say industry experts.

The restrictions, which currently affect people who receive part of their ex-partner's pension benefits, will be lifted, with safeguarded rights abolished. Divorcees will therefore be free to take the portion of any contracted-out protected rights whenever they choose, rather than at the age of 60 and in a lump sum.

However, the member who earned the protected rights will still be forced to comply with restrictions - if they remarry they must provide a 50 per cent income for their new spouse, and the protected rights benefits must be taken in the same proportion as non-protected rights benefits. Mary Stewart, director at Hornbuckle Mitchell, believes that while a step forward has been taken, the rules still upon Protected Rights must now be addressed.

"This further simplification is another small step in the right direction for clients, advisers and pension scheme administrators. Being forced to treat some parts of a pension pot differently to other parts - a kind of pension money 'apartheid' - always adds complexity and costs and ultimately in some cases restricts the freedom of the pension saver to do what is in their own best interests.

"Now that the Government has accepted that principal that divorcees can be trusted with their retirement decisions, we believe it should press ahead more urgently on its plans to scrap the rules forcing all Protected Rights to be treated differently. This would be a significant step with a positive impact on a far larger number of people," she concluded.

Andrew Tully, senior pensions policy manager at Standard Life, added: "This change will be especially beneficial to women, who are more likely to receive pension benefits as part of a divorce settlement. Giving people more flexibility to take pension benefits when and how it suits them best is a welcome development. In extreme circumstances, there may also be a financial benefit for people who get divorced."

- Pensions Age February 2009

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