Fact sheet - Partners affected by Divorce and Dissolution
There are two provisions which allow the Teachers’ Pension Scheme (TPS) benefits of an existing member to be divided between the member and their former spouse or civil partner following a divorce or where a civil partnership has been dissolved: these are known as ‘Earmarking’ and ‘Pension Sharing’.
What is Earmarking?
Earmarking is the term given to the arrangement for the allocation of a part of the member’s future pension benefits to be paid to the former spouse or civil partner when the member retires. Teachers’ Pensions (TP) can only arrange earmarking as a result of an order from a court under the Matrimonial Causes Act. Benefits cannot be earmarked as a result of an out of court settlement.
What happens once arrangements have been set up?
- The earmarking benefits are paid when the member retires.
- The order ceases to apply to earmarked pensions if the former spouse or civil partner remarries or enters into another civil partnership.
- The order ceases to apply when either party dies.
- If the member dies before retiring, a death grant, if covered by the order, will be paid to the former spouse or civil partner.
- It is important that the former spouse or civil partner as well as the member notifies TP of any address changes in order that TP can contact them when they are due to receive benefits.
What is Pension Sharing?
Pension Sharing allows the value of the member’s Cash Equivalent Transfer Value (CETV) to be shared between the member and their former spouse or civil partner following a divorce or where a civil partnership has been dissolved.
The former spouse or civil partner becomes a ‘pension credit member’ of the TPS and is provided with pension benefits in his or her own right, payable when they reach the member’s normal pension age. The member’s pension entitlement is reduced. The value of the pension credit member’s pension is dependant on a number of factors and is payable for their lifetime, irrespective of whether they re-marry, enter into another civil partnership or are pre-deceased by the member.
Will any documents be needed by TP to set up the credit member’s record?
Yes:
- the birth certificate of the credit member (i.e. the former spouse or civil partner);
- a copy of the Decree Absolute for the divorce or annulment or order dissolving a civil partnership; and
- a POD EX form (which is available from TP) to be completed by the pension credit member.
When does the Credit Member claim their pension?
- The credit member’s retirement benefits should be claimed at the same normal pension age as the member i.e. at age 60 or 65.
- If the credit member is also a member of the TPS in their own right those benefits are unaffected by the Pension Sharing order. Where this circumstance exists such a member will have two records in the TPS one recording their service in the scheme, the other recording their Pension Sharing arrangement.
If, before normal pension age, the pension credit member’s life expectancy is less than 1 year, they may apply for serious ill health benefits.
Are transfer provisions available to Credit Members?
No:
- they cannot transfer-out pension benefits from the Scheme; and
- they cannot transfer-in pension benefits from elsewhere.
And Finally
It is important that the credit member notifies TP of any address changes in order that TP can maintain contact.