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Divorce
Pension Sharing on Divorce
Pension Sharing on Divorce was introduced in December 2000 under the powers in the Welfare Reform and Pensions Act 1999. In Scotland the primary legislation is contained with the Family Law (Scotland) 1985 (amended 2006). As part of the divorce process the assets of a marriage are identified and agreement is reached about how these assets or their cash value, are to be shared. Pension rights accrued by either, or both parties, may now be shared.
Full details of cost involved are provided on the information leaflets, click for access.
Link to CETV and PETV application forms
FAQ
Q. What information is required to enable parties to decide whether Pension Sharing is for them?
A. Under The Pensions on Divorce etc (Provision of Information) Regulations 2000 the Agency will provide basic information about a member’s shareable pension rights in the Scheme on request from the member,, their legal representatives or in response to a Court Order. If the request is from a third party, for example, an independent financial advisor, the member must provide a signed mandate authorising release of information prior to any of the information being released. A Cash Equivalent Transfer Value (CETV) will be provided detailing the shareable pension rights available.
Q. What is a CETV?
A. A CETV represents the notional value of the pension rights accrued in the pension scheme. For divorces under Scots Law, only service relating to the period of marriage will be used in calculating the CETV. For divorces under English Law all service will be taken into account. The CETV is calculated using a range of factors supplied to SPPA by the Government’s Actuary Department (GAD) as no actual fund exists. The NHS Scheme is an unfunded public sector pension scheme.
Q. Can I replace the share of my pension benefits that go to my former spouse?
A. No. you can only add to your pension up to the level you would have had the divorce not taken place, and within the normal scheme regulations.
Q. Can I transfer my pension benefits to another scheme?
A. Yes, but your pension benefits will be reduced to take account of the provisions of the Pension Sharing Order. A copy of the Order will be forwarded to your new pension provider to allow them to take account of any effect on Inland Revenue maximum benefit limits.
Q. What about my ex-spouse?
A. The former spouse’s share of the pension benefits will remain within the Scheme and they will not be able to transfer these benefits out of the scheme, bring benefits from any other pension arrangement into the scheme or purchase additional benefits in the scheme.
Q. When does the former spouse get their share of their benefits awarded in the Pension Sharing Order?
A. The former spouse (Credit Member) receives their share of the pension benefits at the Normal Retirement Age of the scheme from which the benefits are derived ( either age 60 or 65) SPPA advise the former spouse of their entitlement and these benefits are increased in line with movements in the Retail Prices Index each year to maintain their value.
The former spouse can only receive their pension benefits earlier if they have a terminal illness and their life expectancy is not more than one year. Should they die before receiving their benefits, a lump sum will be payable to their estate. If your former spouse re-marries they will continue to be entitled to the benefits credited to them, however a credit member's pension carries no entitlement to dependants' pensions.
Q. What will it cost?
A. Full details of cost involved are provided on the information leaflets, click for access.
Q. What information is required by the Agency for implementation?
A.
- the final divorce decree
- Pension Sharing Order or Qualifying Agreement including the information required by the Pensions on Divorce (Provision of Information) Regulations 2000 Section 5
- the administration charges for implementing the Order.
The Agency requests that a draft copy of Orders or Qualifying Agreements is forwarded prior to finalising the divorce. This can save considerable time and costs involved in the event that an Order cannot be implemented in the Scheme.
The Agency recommends that all divorcing couples take independent legal and financial advice prior to seeking a Pension Sharing Agreement.