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Treatment of pension by CSA

My husband is taking a lump sum from his pension fund (which is the norm for his pension).  CSA have deemed that this is salary sacrificing and have given him higher assessment.  As far as CSA are concerned the fact that the pension is his share of his property settlement is irrelevant.  We submitted an objection but while CSA changed the income figure (SCO had used wrong figure), they still deemed reduction to be salary sacrificing.  SCO again made no mention of property settlement and just said that "payer has provided large amount of material ………….but there is nothing in his submissions which convinces me that the child support assessments should be based on anything other than his income".

This means payee gets around $200/month extra.  Is it worth going to the SSAT or should we just give up now?  I do think though that this could have implications for anyone out there who is negotiating a divorce setttlement if they will retire while still paying CSA.  If my husband had any inkling that this would happen, he would have insisted on getting money up front from his divorce rather than doing the decent thing and letting the payee take all the capital assets and a smaller sahre of his fund to allow her to restablish herself quickly.
greebo said
My husband is taking a lump sum from his pension fund (which is the norm for his pension). CSA have deemed that this is salary sacrificing and have given him higher assessment.

Whilst the CSA may not have used the correct terminology trading cash in lieu of income is seen as a method of reducing income and the CSA will assess on what the income would have been without a lump sum withdrawal.

greebo said
As far as CSA are concerned the fact that the pension is his share of his property settlement is irrelevant.

You are confusing the issue of a property settlement with a pension fund or other assets that provide income. Income is income wherever derived and the CSA will treat it as such.

greebo said
We submitted an objection but while CSA changed the income figure (SCO had used wrong figure), they still deemed reduction to be salary sacrificing. SCO again made no mention of property settlement and just said that "payer has provided large amount of material ………….but there is nothing in his submissions which convinces me that the child support assessments should be based on anything other than his income".
Again the issue is not property settlement but the assessed income of the payer.

greebo said
This means payee gets around $200/month extra. Is it worth going to the SSAT or should we just give up now? I do think though that this could have implications for anyone out there who is negotiating a divorce setttlement if they will retire while still paying CSA. If my husband had any inkling that this would happen, he would have insisted on getting money up front from his divorce rather than doing the decent thing and letting the payee take all the capital assets and a smaller sahre of his fund to allow her to restablish herself quickly.

The two questions here are, was your husband properly represented during the property settlement and any child support negotiations and what was the Courts determination regarding child support payments? You are implying there was some form of trade off between a pension fund and assets. When did he become aware of the very different rates of assessment between the UK CSA and the CSA in Australia?

The issue in Australia is straightforward and well documented,  people will be assessed by the CSA on their income whether that be from work, investments or pension funds. The exception to this is if there are valid legal (Court) settlement terms that provide initial lump sums or other methods of child support payments and that child support will not be assessed by the CSA.



Executive Member of SRL-Resources, the Family Law People on this site (look for the Avatars) Be mindful what you post in public areas. 
Divorce settlement took place in the UK.  In UK pension funds are treated as marital capital assets in the property settlement, much as superannuation is in Oz.  In this case, house was valued at a certain amount but the payer's pension fund was worth more.  It was decided that payee would get all available assets upfront to enable her to relocate to Oz and would get X% pension fund through a pension sharing order to make up her share of the settlement to 50% of all marital assets.  Also payer would get majority of debts from marriage.

Settlement was made 2 weeks before payee went to Oz so order directed husband to pay 800/month while she was in UK with understanding that payee would have to go to Oz CSA (who had advised payer's lawyer that as payee would initially at least be unemployed in Oz, that a CSA assessment, if it were higher, would overrule any UK child support assessment).    Settlement reached was straightforward by UK standards - basically payer was forgoing money upfront in interests of the children, for money at a later stage.

While in UK it was assumed that Oz CSA would be broadly similar to UK CSA system.  Back in 2002, the CSA website provided little info on how their system worked and while payer's lawyer did speak to CSA, he was given cursory and misleading advice (for example they told him that payer would get substantial reduction for contact costs).

After getting initial settlement (the max possible of around $32k), it was clear that payer would be unable to support himself, pay CSA and minimum debt repayments.  He made a COA under reasons for self-support but CSA ruled that UK cost of living was irrelevant (for self support amount) and that it would be unfair to take debts from a divorce settlement into consideration as this would mean that CSA would be amending a court order settlement.  This seems to be diamtetrically opposed to the stance they are taking now as in effect payee will be getting a larger cut.  Had payer been hardnosed and not given a damn about his kids, he could have fought to take 50% money upfront giving the payee less money to re-establish herself with, and as her larger share of pension pot would mean a smaller pension available to payer, a far smaller child support income now.

Had the pension fund not been included in the settlement, I would entirely agree with CSA's stance but it seems unfair that the $250 000 of cash, the payee had when she rocked up in Oz and made her initiall application was ignored (as it wouldn't be fair to take the settlement into account) but the CSA in effect believes that the payer shouldn't be able to get a far smaller amount, to enable him to finally re-establish himself, when he retires.  Payee will never be expected to use her pension towards kids as she gets her lump sum/pension just after kids have all turned 18.

All I can say to any potential payers negotiating divorce settlements, who may hit retirement before their kids turn 18, is fight to get any cash upfront or fight to keep the house.  Let the ex have the lion's share of the superannuation and the pain of trying to get back on their feet with no money upfront - after all, they are more likley to get welfare housing as a family unit than you are!
greebo said
Divorce settlement took place in the UK. In UK pension funds are treated as marital capital assets in the property settlement, much as superannuation is in Oz. In this case, house was valued at a certain amount but thepayer's pension fund was worth more. It was decided that payee would get all available assets upfront to enable her to relocate to Oz and would get X% pension fund through a pension sharing order to make up her share of the settlement to 50% of all marital assets. Also payer would get majority of debts from marriage.
By Australian standards he got a reasonable deal. If there were several children and depending on the duration of the marriage and who contributed what he might have faced a 60/40 or even a 65/35 and she may even have tried to claim spousal maintenance. Obviously the debt component you speak about was part of the settlement but that would relate more to the value of the debts as a percentage of the assets.
greebo said
Settlement was made 2 weeks before payee went to Oz so order directed husband to pay 800/month while she was in UK with understanding that payee would have to go to Oz CSA (who had advised payer's lawyer that as payee would initially at least be unemployed in Oz, that a CSA assessment, if it were higher, would overrule anyUK child support assessment). Settlement reached was straightforward by UK standards - basically payer was forgoing money upfront in interests of the children, for money at a later stage.
Here is your greatest problem by stating that it was understood the payee would go to the Australian CSA and that if this were higher it would overrule any UK CSA assessment. Was the 800 per month in pounds or Australian dollars? If it was in pounds and with dollar conversion and the higher rate of Australian CSA this would have translated somewhere between $2,000 to $2,400 per month.
greebo said
While in UK it was assumed that Oz CSA would be broadly similar to UK CSA system. Back in 2002, the CSA website provided little info on how their system worked and while payer's lawyer did speak to CSA, he was given cursory and misleading advice (for example they told him that payer would get substantial reduction for contact costs).
Certainly as far back as 2002 most equivalent rates were at least 25-50% higher than the UK so the term broadly similar was an incorrect assumption . You are saying that a Lawyer took cursory advice and did not seek written confirmation from the CSA? Cost of contact would have been allowable but there would have been either a dollar or percentage cap imposed.
greebo said
After getting initial settlement (the max possible of around $32k), it was clear that payer would be unable to support himself, pay CSA and minimum debt repayments. He made a COA under reasons for self-support but CSA ruled that UK cost of living was irrelevant (for self support amount) and that it would be unfair to take debts from a divorce settlement into consideration as this would mean that CSA would be amending a court order settlement. This seems to be diamtetrically opposed to the stance they are taking now as in effect payee will be getting a larger cut. Had payer been hardnosed and not given a damn about his kids, he could have fought to take 50% money upfront giving thepayeeless money to re-establish herself with, and as her larger share of pension pot would mean a smaller pension available to payer, a far smallerchild support income now.
What you are saying now is that this was an agreed settlement and you were obviously represented but did not understand the financial consequences of the settlement. It is not the CSA being hard nosed as any debts were part of the divorce settlement. The CSA would be hard put to alter any Court property assessment over here let alone the UK. Besides which it is none of the CSAs business. Their primary function is to collect a percentage of income.
greebo said
Had the pension fund not been included in the settlement, I would entirely agree with CSA's stance but it seems unfair that the $250 000 of cash, the payee had when she rocked up in Oz and made her initiall application was ignored (as it wouldn't be fair to take the settlement into account) but the CSA in effect believes that the payer shouldn't be able to get a far smaller amount, to enable him to finally re-establish himself,when he retires. Payee will never be expected to use her pension towards kids as she gets her lump sum/pension just after kids have all turned 18.

Pension funds are treated as marital assets in both Countries. As regards the $250K in cash the CSA would have treated it as a standard property settlement. If the money had been invested and bore interest then that would have been treated as income. If the money was used to buy another property it would have been ignored. It is not what she uses the pension for after the children turn 18 but what he would have used his pension for if they were still together. The fact that they are no longer together does not alter his or her obligations to provide for the children.
In Australia we now have a reestablishment period of 3 years. You are talking about a divorce that occured 6 years ago so perhaps the agreed debts are still a serious issue for you.
greebo said
All I can say to any potential payersnegotiating divorce settlements,who may hit retirement before their kids turn 18, isfight to get anycash upfront or fight tokeep the house. Let theex have thelion's share of the superannuation and the pain of trying to get back on their feet with no money upfront - after all, they are more likley to get welfare housing as a family unit than you are!
Even with negotiated property settlements the Courts want to know that both partners understand the consequences of what they are agreeing to. In disputed settlements it is more likely for the wife who would mostly get more time with the children to get a larger share of the property pool particularly the Family home because that is an easily realizable asset.

As regards the SSAT what are your arguments?

The CSA are treating income from a pension as income for CSA purposes? that will not go down.

There should be an allowance because of a property settlement made 6 years ago when the payer was legally represented and agreed to the settlement?. Claiming 6 years later that the consequences were not properly understood and now cause financial hardship and an allowance should now be made is an awfully big barrow to push up the hill.

The self support amount is incorrect?- that would require complex arguments that the SSAT would probably not rule on.



Executive Member of SRL-Resources, the Family Law People on this site (look for the Avatars) Be mindful what you post in public areas. 
Case law sets the 50/50 divorce settlement split in the UK.  It cannot not take into consideration that the non custodial parent may go abroad and get an unreasonable amount of child support.   I do not think it is reasonable to expect a court ruling to try and legislate for the potential action of foreign legislation 6 years down the line.  After all if all marital assets are treated as capital for the purposes of a settlement by the courts (both UK and Australian), why should CSA think it is ok to treat money available from a pension fund differently to an equal sum of money given to the payee upfront on divorce?  After all payee shouldn't she be expected to use this to generate income rather than claiming dole?

The 800 UK pounds/month payments increased to about $35k/pa under the Oz CSA. But this is irrelevant now.  I must admit that I am bitter that CSA basically agreed that payer could not support himself but still dismissed it.  Without my help (I paid for everything for 3 years), payer would have gone bankrupt.  This would have lost him his job and hence payee would have got minimum payments!

I agree CSA do have the right to assess payer as generating the max possible income but their own documentation states that discretion should be used.  To quote the CSA's own documentation "once CSA has determined that parent's income , earning capacity are not reflected in child support assessment, it must decide whether this produce an unfair result".  Letters from the payee's solicitor show that payee agrees that the payer will take the lump sum to re-establish himself so it seems harsh that CSA should effectively support her in reneging on this deal by effectively saying that payer should not be able to do this (payee told CSA about lump sum in cross application).   CSA guide also says "in each case it will be necessary to decide whether the (lump sum) payment results in one parent being in a better financial position compared to the other parent".  In the CSA's guide, the example given of when a payer's financial resources are taken into account is that of a payer who has a low income but has a lump sum (not from his divorce settlement) which can pay off his mortgage, while the payee is unemployed and lives in public housing with 3 kids.  In our case, payee is working, and has almost paid off house, while payer is retired, has 2 other dependents, lives in military housing (provided for only as long as I stay in military) and has no assets apart from the lump sum (which is less than capital in payees home and would pay for less than 50% average property in UK) and is his share of settlement.   Our argument to SSAT would be on natural justice grounds that CSA have not considered whether decision was fair to both parties or the relative financial situations.
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