If you get divorced, or dissolve your civil partnership, the court will take your pension assets into account when they decide a financial settlement.
You and your ex-spouse or ex-partner will each need to tell the court about the value of your pension benefits including the cash equivalent value (CEV). The CEV is the ‘capitalised’ value of your pension benefits, and a convenient way to assess their value in relation to your other assets.
How do I get the information I need?
Either download and fill-in our divorce request form or ask your solicitor to request this information on your behalf. Please do this as soon as possible because we need several weeks to prepare a CEV valuation.
We provide one free CEV valuation a year. We will usually charge you if you request more than one or ask for additional information.
We'll acknowledge in writing all your correspondence in connection with divorce or dissolution proceedings. Please contact us if you don’t get this.
Pension sharing options
The following are some of the ways your pension benefits can be shared.
Pension offsetting
You can offset the value of your pension benefits against the value of other financial assets in the divorce settlement. For example, you could keep your pension, and your ex-spouse or ex-partner could get a larger share of the value of your house (this doesn't apply if you are in receipt of a dependents pension).
Pension sharing
The court might issue a pension sharing order that transfers part or even all your pension benefits to your ex-spouse or ex-partner. Your ex-spouse or ex-partner will hold in their own right any benefits transferred under the order, even if you or your ex-spouse or ex-partner’s circumstances change in the future (if they remarry for example). The amount and payment date of transferred benefits isn’t linked to your benefits.
Earmarking order
Earmarking is a term used to describe special attachment orders made by the court. When the court makes an attachment, or earmarking order, the pension remains with the member, but a payment is made to their ex-spouse when the member's benefits become payable. Earmarking can also be used in cases of judicial separation.
The court can order that the ex-spouse receives one or a combination of the following.
- All or part of the LGPS pension (this does not apply in Scotland)
- All or part of the LGPS lump-sum retirement grant
- All or part of any lump sum paid on death.
An order can also require a member to exchange some of the pension for an additional lump-sum retirement grant (this doesn't apply in Scotland).
If the court makes an earmarking order, your pension benefits still belong to you, but some are ‘earmarked’ for your ex-spouse. Earmarked benefits will be paid to your ex-spouse when your benefits are paid to you, reducing the amount you get.
Because of the following limitations, earmarking orders aren't widely used.
- Pension rights remain with you, so your ex-spouse or ex-partner must wait for you to retire or die to get earmarked benefits.
- If your ex-spouse or ex-partner remarries or enters into a new civil partnership, an earmarking order against pension payments (but not lump sums unless the order directs otherwise) would cease and the full pension would be restored to you.
- Pension payments to your ex-spouse or ex-partner would stop on your death, although any earmarked lump-sum death grant would then become payable to your ex-spouse or ex-partner.
- A transfer of pension benefits to another pension scheme will result in the earmarking order also transferring.
How will a pension sharing order affect my pension benefits?
It depends on whether the order is issued before or after you retire as shown below.
A pension sharing order issued before you retire
Pension benefits you’ve built-up to the date the order is applied are reduced by the percentage the court allocates to your ex-spouse or ex-partner. The reduction is known as a pension debit and is increased in line with the rise in the cost of living between the date it was first calculated and the date your benefits are paid. When your benefits are paid, the re-valued amount of the pension debit is deducted from your retirement benefits, and adjusted if your benefits are paid before or after your normal pension age.
A pension sharing order issued after you retire
Your current pension will be reduced by the percentage the court allocates to your ex-spouse or ex-partner from the date of the pension sharing order. Please make sure we get the order as soon as possible so we can take it into account when we adjust your pension. Otherwise you'll most likely be overpaid and we'll need to recover the overpayment from you.
How will a pension sharing order affect death benefits?
Your ex-spouse or ex-partner will no longer be entitled to a survivor pension from you.
If you nominated your ex-spouse or ex-partner to receive some or all of your lump-sum death grant, we assume you want us to disregard it after your divorce or dissolution. You can make a new nomination by downloading a ‘death grant expression of wish’ form here – or ask us to mail you one.
If you later remarry or form a new civil partnership, a pension share will reduce any benefits due to your new spouse. However, if you have dependent children, any child’s pension payable won’t be reduced. Any dependent children’s pension will remain linked to your pension and the value of the benefits payable will be worked out as if the pension share hadn’t taken place.
Buying additional pension benefits
If you haven't started getting your pension yet, you might be able top-up your benefits by buying extra scheme pension with additional pension contributions (APCs) and/or paying additional voluntary contributions (AVCs).
Other options are available, like paying into an individual pension plan through another pension provider, but you should take independent financial advice about this and any other options you might have.
Can I transfer my pension benefits to another pension scheme?
Yes, you can transfer your remaining benefits to another pension arrangement if you leave the pension scheme - as long as you haven’t yet been paid them. There are time limits for doing this – see by clicking here or call us for more information.
If you transfer your benefits to another LGPS pension fund, we'll transfer your full benefits and the other pension fund will be responsible for deducting the pension debit from your benefits at retirement.
If you transfer your pension benefits to any other type of pension scheme or arrangement, we'll only pay a transfer value for your pension benefits less the value of the pension debit.
How does a pension sharing order affect the annual allowance?
When you take your benefits, it’s the reduced value after the pension debit has been deducted that’s used to assess the value of your benefits against the value of all the pension savings you’re allowed before you pay any tax charge.
What does the pension fund need to apply a pension sharing order?
- Payment of our charges in full
- A sealed pension sharing order
- A sealed decree absolute
