Personal Finance: Unlocking pensions

DIVORCE lawyers will be poring over last week's decision by the Court of Appeal that seems to unlock pensions for divorced spouses.

The court confirmed a High Court ruling to allow Anne Brooks a share of her husband's small self-administered scheme set up after their marriage. The fact that Mrs Brooks had worked in her husband's building firm as company secretary was not part of the essential argument about her entitlement.

But the judgment went much wider. It said firmly that the courts do have jurisdiction over pensions, and the only brake was that no one, other than the spouse and children, should be affected.

It is clearly not beyond the imagination of actuaries to find ways of taking the pension entitlement of one member of a scheme and giving it a stand-alone value. The way this is divided - minus any costs to the scheme of doing the administration and arithmetic - is then a matter for the divorcing couple and for their lawyers.

So company pension schemes and standard personal pension schemes, as well as the Brooks' more unusual scheme, could well be the subject of further test cases, though it is likely that the Brooks' case will go to the House of Lords for a final ruling as it changes a fundamental aspect of the law on pensions.

If the wider interpretation of the court's view stands up to the tests, then we will see an end to the rough trade-off that usually means that the high-earning husband keeps the invisible pension while the wife hangs on to the house.

Lately, property has seemed as illiquid as pensions, but in theory it looks as if all marital assets will soon be translatable into cash or cash equivalents, allowing both parties in a divorce more scope to start afresh - although there is always the danger that neither will be able to afford to house themselves or enjoy a comfortable old age.

THE Lloyds Bank/ Cheltenham & Gloucester deal has had its days in court and now awaits a decision.

Either the High Court will allow the bank to pay cash straight to C&G members, or the whole deal will have to go back to the drawing board. No doubt another way of allowing the bank to take over the building society could be devised.

One of the objections to the takeover is that the shower of money - pounds 500 plus 10 per cent for most customers - might enourage hot money to flit between societies in search of the next takeover target, and destabilise the whole building society set-up.

Charles Fry, who runs Johnson Fry, is never slow to see an opportunity. He is already canvassing to see if there are any takers for a bespoke 'spot the target' fund.

What he proposes is that for a flat pounds 50 fee, pounds 1,000 would be invested in 10 societies chosen by Johnson Fry, probably using a single application form and single proof of identifcation.

The money would earn interest, but would also be lurking around in the hope of catching bonuses.

Mr Fry envisages providing the service for several members of the family, rather like the stagging operations that greet juicy privatisations.

And if he gets it wrong? Investors will just have to be philosophical.

ANOTHER of the Fry bright ideas is to drink your interest - tax free.

You hand over pounds 4,200, receive 10 cases of wine a year (120 bottles) for five years, then get your money back.

Chateau de Sours, a Bordeaux, comes in red, rose and white and sells at pounds 6 a bottle.

The owners, Esme and Sara Johnstone, sold their stake in Majestic Wine Warehouses to set up on the 230-acre estate, and now they want to buy the land next door. So, in effect, they are finding cheap finance from wine drinkers, and the drinkers are getting liquid returns on their capital.