Pension Sharing on Divorce

There are arrangements whereby, when a couple divorce or a civil partnership is legally dissolved, the Courts will establish the value of the member’s pension and the amount of the pension that is to be shared.

A pension debit will then be made against the member’s benefits that will reduce their pension at retirement or death. A corresponding credit will be given to the ex-spouse or ex-civil partner who will become a ‘credit member’ in the TPS.

These provisions are explained in more detail in our leaflet ‘Pensions on Divorce and Dissolution’ which is available in the Forms and Leaflets section of the website.

Changes Affecting Pension Credit Members From September 2010

Matters affecting Pension Credit Members (PCMs)

Background: A PCM is a person who has been provided with an entitlement to benefits (“pension credit rights”) as a result of a pension sharing order, following a divorce or the dissolution of a civil partnership. The member from whom the rights originated is known as the “pension debit member” (PDM).

NPA for mixed service PCMs of 65

If a PCM’s pension credit rights are from a former spouse / civil partner who was a person with mixed service (service counting for both NPA60 and NPA 65), the PCM’s benefit will count against NPA 65. This is to comply with social security legislation which prescribes that PCMs can only have a single NPA.

Action for PCMs with Mixed Service – To be aware.

Introduction of Actuarially Adjusted Benefits for PCMs

From 1 September 2010, provided the PDM had service on or after 30 March 2000, the PCM will be able to take benefits from age 55 on an actuarially adjusted basis.

The payable date cannot be more than 6 weeks after the application is signed.

Action for PCMs – To be aware that the Regulations will change from 1 September 2010 to allow a PCM to take benefits from age 55, adjusted by the appropriate factor. This option is only available if the PDM was in pensionable employment on or after 30 March 2000.

The conversion of pension to lump sum for PCMs in certain cases

The 2010 Regulations make provision for a PCM to convert pension to increase the retirement lump sum in certain circumstances. The position from 1 September 2010 is summarised below:

It remains the case that a retirement lump sum is not payable to a PCM where the PDM has already taken a lump sum before the effective date of the divorce or dissolution.
A PCM may convert pension to lump sum provided the pension credit is derived from rights attributable to the PDM’s pensionable employment on or after 1 January 2007.

Action for PCMs – To be aware that the Regulations will be amended from September 2010 to allow a PCM to convert pension to lump sum, provided the pension credit rights are derived from PDM rights accrued on or after 1 January 2007.