Pensions can be valuable personal assets. They are often taken into consideration as part of the financial settlement in divorces or when a civil partnership ends.
If you’re dealing with the break-up of a marriage or civil partnership, we can help by: providing you a pension valuation. We can also help with implementing any pension sharing arrangements.
If you are paying into a pension with us, or have in the past, and need a valuation, you must complete and send us a Cash Equivalent Transfer Value (CETV) application form.
If you are already receiving your pension you will need to complete and send us a Pension Equivalent Transfer Value (PETV) application form.
These can be found in the relevant forms area:
A step-by-step guide to pension sharing
Make a valuation request
Requests for valuations must be made in writing. If the request is for a Cash Equivalent Transfer value, you’ll need to provide the date of marriage or civil partnership and the date of separation. These dates aren’t required when the member already receives a pension and the request is for a Pensioner Equivalent Transfer Value.
The request must also clearly specify that it is for the purposes of divorce or the dissolution of a civil partnership.
Note: To calculate pension values, SPPA will need information from third parties such as employers and HM Revenue & Customs. This process can take up to three months to complete.
Before any sensible financial agreement can be reached, a valuation of the pension benefits must be made. For the unfunded public sector schemes managed by SPPA, valuations are either done on a Cash Equivalent Transfer Value basis where benefits are not yet in payment or on a Pensioner Equivalent Transfer Value basis where the member has already started taking benefits from the scheme. These notional valuations are calculated using a set of factorial tables and formulas supplied by the Government Actuary’s Department.
Pension sharing can be complicated. It’s always best to get expert legal and financial advice while exploring the possibility of pension sharing.
Consider the fees
Due to the complexity of the work involved, producing valuations and creating pension sharing agreements attract a range of fees payable to SPPA. Our current fee schedules for this type of work are clearly detailed in the application forms.
Create a pension sharing agreement
If you decide that a pension sharing agreement is the best way to proceed in your divorce or dissolution settlement, you’ll have to:
- provide a copy of the Extract Decree or Dissolution Order
- supply your Pension Sharing Order, including the information required by the Pensions on Divorce (Provision of Information) Regulations 2000 Section 5
- pay the administration charges for implementing the Order.
Note that submitting a draft copy of the Pension Sharing Orders or Qualifying Agreement before finalising the divorce can save considerable time and costs involved in the event that, for some reason, an Order cannot be implemented in the Scheme.
Your questions answered
What information does SPPA provide regarding pension sharing?
SPPA is legally obliged to provide basic information about a member’s shareable pension rights 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) or a Pensioner Equivalent Transfer Value (PETV) will be provided detailing the shareable pension rights available.
A Pensioner Equivalent Transfer Value (PETV) will be provided on receipt of the appropriate fee; PETVs are not apportioned to reflect the member's period of marriage. SPPA advises members seeking apportionment of PETVs to retain the advice of an Actuary.
What is a Cash Equivalent Transfer Value?
A Cash Equivalent Transfer Value represents the notional value of the pension rights accrued in the pension scheme.
For divorces under Scots Law, only pension rights relating to the period of marriage will be used in calculating the Cash Equivalent Transfer Value.
For divorces under English Law all pension rights will be taken into account.
The Cash Equivalent Transfer Value is calculated using a range of factors supplied to SPPA by the Government Actuary’s Department as no actual fund exists.
Can I replace the share of my pension benefits that go to my former spouse?
No, you cannot replace the specific pension benefits that have been given to your former spouse. You can buy additional pension within the normal scheme regulations.
Once a Pension Sharing Order is in place, can I transfer my remaining benefits to another scheme?
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 HMRC’s maximum benefit limits.
Can former spouses or former civil partners transfer benefits?
No. The scheme member’s former partner becomes what’s known as a ‘credit member’ of the scheme. Their share of the pension benefits remain within the scheme and cannot be transferred out of the scheme. They also cannot add to the value of the shared benefit through transfers into the scheme or purchase additional benefits in the scheme.
When do ‘credit members’ get their share of their benefits awarded in a Pension Sharing Order?
The credit member will receive a share of the pension benefits at the same age as the normal scheme retirement age of their former spouse or civil partner. This will be either age 60, 65 or State Pension age, depending on the scheme, or section of the scheme.
SPPA will advise the amount of these benefits and the age at which they’ll become payable. Until the benefits are put into payment they'll be adjusted each year according to the yearly Pension Review Order published by the government. The Pension Review Order seeks to protect the worth of pension rights from the effects of inflation.
It may also be possible for a credit member to commute some of their pension to receive a tax-free lump sum, depending on the specific scheme regulations of the source or debit pension.
What will it cost?
NHS and Teachers
Full details of all SPPA administration costs involved are provided within our Pension Sharing on Divorce leaflet.
Police and Fire
Police and Fire members should contact SPPA for this leaflet.
What information do I need to provide for SPPA to put the pension sharing arrangements in place?
Before you go ahead with the pension sharing arrangement you should send us the draft copies of any Orders or Qualifying Agreements prior to finalising your divorce or dissolution.
This can save considerable time and costs as SPPA can review this document and ensure that its terms are enforceable.
Assuming all of this is in order and your divorce or dissolution becomes final, you’ll need to supply:
- a copy of the Extract Decree or Dissolution Order
- your Pension Sharing Order, including the information required by the Pensions on Divorce (Provision of Information) Regulations 2000 Section 5
- the administration charges for implementing the Order.