Divorce or Dissolution of a Civil Partnership

You may wish to get legal advice from your solicitor on how to deal with your Local Government Pension Scheme (LGPS) benefits and you and your partner will need to consider how to treat your pension rights as part of any divorce/dissolution settlement.

What happens to your LGPS benefits if you get divorced or your civil partnership is dissolved?

• Your ex-spouse/civil partner will cease to be entitled to a widow's, widower's or civil partner's pension should you die before them.
• Any children's pension paid to an eligible child in the event of your death will not be affected by your divorce or dissolution.
• If you have nominated your ex-spouse/civil partner to receive any lump sum death grant payable on your death, your nomination will remain in place unless you change it.  If you wish to change your nomination please complete a Death Grant Nomination Form  (69 KB). The Court may, however, issue an Earmarking Order stating that all or part of any lump sum death grant is payable to your ex-spouse or ex-civil partner.

What is the process to be followed?

You will need specific information about your LGPS benefits as part of the proceedings for a divorce, judicial separation or nullity of marriage, or for dissolution, separation or nullity of a civil partnership. 

You or your solicitor should contact Pension Services for this information, including an estimate of the Cash Equivalent Value (CEV) of your accrued pension rights in the LGPS.  The Court will take this value into account in your settlement and may or may not lead to the actual imposition of a Pension Sharing Order on the Pension Scheme. 

In Scotland, only the pension rights built up during your marriage / civil partnership are taken into account.

Costs

You usually get one free CEV estimate each year.  Any other costs for supplying information or complying with a Court Order will be recovered from you and/or your ex-spouse or ex- civil partner in accordance with a schedule of charges available from Pension Services.

Pension Sharing on Divorce

The new pension sharing provisions came into force on 1st December 2000 in respect of divorce or annulment (but not judicial separation) proceedings which commenced on or after that date.  They are intended to provide a clean break between the parties to a 'divorce' settlement in relation to pension rights.

The new pension sharing provisions are not compulsory.  They provide an alternative to the current offset and/or the earmarking of pension rights which will still be available as alternative routes for parties to a divorce.  In judicial separation cases, only earmarking and offset will be available.

The Court may offset the value of your pension rights against your assets in the divorce/dissolution settlement or it may issue a Pension Sharing Order or an Earmarking Order against your pension. 

If the Court issues a Pension Sharing Order, your ex-spouse will be entitled to a Pension Credit and your pension benefits will be subject to a Pension Debit.

Pension Credit

If the Court issues a Pension Sharing Order, the LGPS offers the ex-spouse of a divorced scheme member the options of retaining the Pension Credit awarded to him/her in the LGPS or transferring the Cash Equivalent Value of the Pension Credit to any other qualifying pension arrangement.

The Pension Credit will provide the credited member with a pension and, where the divorced scheme member is an active or deferred member (as opposed to being a pensioner) also a lump sum.  The pension and, if any, lump sum will increase each year in line with the rise in the Consumer Price Index and will normally be payable at age 65.

However, the Pension Credit may be commuted for a lump sum before age 65 if the credited member is suffering from serious ill health (i.e. where life expectancy is less than one year).  A trivial Pension Credit can also be commuted for a lump sum at State Pension Age.

If a credited member dies before the benefits have become payable, the credited lump sum, if any, will be paid as a lump sum death grant to the credited member's personal representative.  If a credited member dies within 10 years of benefits coming into payment, a lump sum death grant equal to the balance of 10 years worth of pension will be paid to whomever the administering authority decides, at its sole discretion, to make payment to.

Full benefit details will be provided the the credited member if a Pension Sharing Order is issued by the Court.

Pension Debit

If the Court issues a Pension Sharing Order they will have been advised of the Cash Equivalent Value of your accrued pension rights and the Court will have determined how much of those rights have been awarded to your ex-spouse.  This award by the Court is used to establish the Pension Credit for your ex-spouse.

Accordingly, having established the Pension Credit your accrued benefits are correspondingly reduced as a Pension Debit.

The Debit is then increased each year in line with the rise in the Consumer Price Index (Pension Increase) and will be deducted from your benefits at retirement.

Your pension rights remain payable under the normal provisions.

Are you awarded a pension share on divorce or dissolution of a civil partnership?

If you have been awarded a share of your ex-spouse or ex-civil partner's LGPS pension rights following a pension sharing order, you have your own LGPS benefits, known as pension credit benefits.

Your pension credit benefits provide an annual pension for the rest of your life from age 65 (or later if the order was issued after then).

If your ex-spouse or ex-civil partner was in the LGPS in England or Wales you can elect to draw your pension credit benefits on or after age 60 and before age 65 with a reduction for early payment. At the same time you will receive a tax-free lump sum (three times your pension) as long as your ex-spouse or ex-civil partner had not already retired and received a lump sum when the order was issued.

You also have valuable life cover.

These benefits are held in your ex-spouse/ex-civil partner's pension fund where they increase in value every year in line with the cost of living, until payment. Your pension will continue to receive cost of living increases every year, as it is paid to you.

Your ex-spouse/ex-civil partner's pension fund administrator will have provided you with details of the value of your pension credit benefits, at the point of divorce/dissolution. They will also provide you with an annual statement of your benefits, so you can see how their value increases every year.

Points to Note

• Both the debited and the credited member should consider changing Death Grant Nominations already made.
• Children's provisions for the debited member remain based on the pre-reduction pension levels.
• No spouse's or children's pensions are payable in respect of the credited member.
• No transfer of accrued rights from other Pension Funds will be accepted for the credited member.
• A Pension Credit cannot be transferred into this Scheme or amalgamated with any other pension rights already held within this Scheme.
• If you have an Additional Voluntary Contribution fund, we will write to the provider for a valuation of your fund.

Please remember this is only a guide.  It is not an interpretation of the Scheme Regulations. The Scheme Regulations will be used to reach a decision in any dispute or disagreement.