What happens to your pension if you get divorced late in life?
You may be asked by the court for specific information about your LGPS benefits for divorce/dissolution purposes. You will need an estimate of your Cash Equivalent Value (CEV) of your pension rights. This is because divorcing couples are required to disclose all their financial interests to each other and to the Court. The CEV is the capitalized value of your pension benefits. It provides a convenient way of assessing the value of your pension in relation to your other assets.
To request a CEV please contact ERPF.
After reading the information provided you should complete and return the form to the ERPF at the address below:
East Riding Pension Fund
PO Box 118
Details of your CEV and other relevant information will then be issued to you.
A CEV quotation is normally provided within 3 months of the initial request being received and you get one quotation free each year. Any other costs for supplying information or complying with a court order will be recovered from you and/or you ex-spouse or ex-civil partner in accordance with a schedule of charges available from the ERPF.
There are a number of ways that a court could agree to split your pension benefits:
You can offset the value of your pension rights against the value of other financial assets in your divorce/dissolution settlement. For example, you could keep your pension and your ex-spouse or ex-civil partner could get a larger share of the value of the house.
Earmarking is a term used to describe special attachment orders that are made by the Court.
When an attachment or earmarking order is made, the pension still remains yours, but the ERPF is required to make some form of payment to your former spouse when your benefits become payable.
The Court can order that your former spouse receive one, or a combination, of the following benefits:
You can still transfer your benefits to another pension arrangement on leaving the LGPS, as long as your new pension provider can accept the earmarking order.
Earmarking has limitations and is not widely used. As the pension rights remain with you, your ex-spouse or ex-civil partner must wait for you to retire or die to receive the earmarked benefits. If your former spouse or civil 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 former spouse or civil partner would cease on your death, although any earmarked lump sum death grant would then become payable to your ex-spouse or ex-civil partner.
If the Court issues a Pension Sharing Order (qualifying agreement in Scotland) part of your benefits are transferred to your ex-spouse or ex-civil partner. They will keep that share, in their own right, even if your or their circumstances change. This is known as a Pension Credit it can be left in the scheme and is paid from Normal Pension Age. Alternatively, the pension credit can be transferred to another qualifying pension scheme.
Your pension and any lump sum will be reduced by the amount transferred to your ex-spouse or ex-civil partner. This is known as a Pension Debit and it will be 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 revalued amount of the Pension Debit will be deducted from your retirement benefits. Alternatively, you can still transfer your remaining benefits to another pension arrangement on leaving the LGPS. If you transfer within the LGPS, your new fund will reduce your benefits by the Pension Debit at retirement.
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.
If your LGPS benefits are subject to a Pension Sharing Order and you remarry, enter into a new civil partnership or into a cohabiting partnership, any spouse's pension, civil partner’s pension or eligible cohabiting partner's pension payable following your death will also be reduced.
If you remarry or enter into a new civil partnership and then divorce or dissolve your civil partnership again, your remaining pension rights can be subject to further division, although a Pension Sharing Order cannot be issued if an Earmarking Order has already been issued against your LGPS pension rights.
Similarly, an Earmarking Order cannot be issued if your pension benefits are already subject to a Pension Sharing Order in respect of the marriage/civil partnership.