This section sets out the method and instructions for calculating the pension debit to be applied to the member's benefits following the issue of a pension sharing order by the Court:
- Where the member is a pensioner, the debit will apply to the member's own pension with effect from the transfer date, and also to the pension payable to a future spouse, civil partner or other qualifying partner on the member's death.
- Where the member is a deferred pensioner, the debit will apply to the member's pension at the point when the pension becomes payable. The debit will also apply to the pension payable to a future spouse, civil partner or other qualifying partner on the member's death.
- Where the member is still contributing to the scheme, the debit will be calculated assuming retirement at age 65 (age 60 for special members). If the member retires at an earlier age, the debit will be reduced. If the member retires at a later age, the debit will be increased. The debit will also apply to the pension payable to a future spouse, civil partner or other qualifying partner on the member's death.
The adjustment factors to be applied to the pension debit if the member retires earlier or later than age 65 (age 60 for special members) should only be used for divorce purposes as set out in this guidance.
The pension sharing order will specify the percentage of the member's benefits that the ex-partner will be entitled to, for divorces in England and Wales. For Scottish divorces the value of the cash equivalent to be shared will be specified, and the proportion will be calculated as described in the Calculation of the value of shareable rights section.
The debit applying to the member's pension, any future qualifying partner's pension and GMP pension will be:
MEMDEB = CP x appropriate percentage / 100
SURDEB = SUR x appropriate percentage / 100
PREGMPDEB = PRE GMP x appropriate percentage / 100
POSTGMPDEB = POST GMP x appropriate percentage / 100
Where:
MEMDEB is the debit applying to the members pension
SURDEB is the debit applying to the future spouse, civil partner or other qualifying partner's pension
PREGMPDEB is the debit applying to the pre88 GMP pension
POSTGMPDEB is the debit applying to the post88 GMP pension
CP, SUR, PRE GMP and POST GMP as defined in the Calculating the cash equivalent for members already in receipt of benefits section.
As the member's pension is already in payment, the member's pension will be reduced immediately in line with the pension debits calculated above.
The principle is the same as for the pensioner, except that the debit will not start to be deducted until the member's benefits come into payment.
The debit should be expressed as a debit to the member's benefits at exit:
MEMDEB = Member's pension at exit x appropriate percentage / 100
SURDEB = Survivor's pension at exit x appropriate percentage / 100
PREGMPDEB = PRE GMP at exit x appropriate percentage / 100
POSTGMPDEB = POST GMP at exit x appropriate percentage / 100
At retirement, both the benefit and the debit should be revalued from the date of exit to the date of retirement, and the revalued debit should be subtracted from the revalued benefit.
If the member's deferred pension comes into payment before age 65 (age 60 for special members), whether on voluntary early retirement or on grounds of ill health, the debit applied should be reduced. This is because the debit will be applied over a longer period than was assumed in calculating the original amount of the debit, and so a lower amount should be deducted.
If the member's deferred pension comes into payment after age 65 (age 60 for special members), the debit applied should be increased. This is because the debit will be applied over a shorter period than was assumed in calculating the original amount of the debit, and so a higher amount should be deducted.
The pension debit will be adjusted on early/late retirement from deferred as follows:
Adjusted pension debit = MEMDEB x PI x MEMERFret
Where:
MEMDEB is the pension debit to the member's pension at exit - see the Pension debit for a deferred pensioner section
PI is the pension increase uprating factor between the date of exit and the date of retirement
MEMERFret is the early/late retirement factor at retirement age, based on member's age in years and complete months - Table L1, L1S, L2, L2S, M1 or M1S, as appropriate
The principle is that the debit acts like a negative deferred pension. The debit should be expressed as a debit to the member's benefits at the transfer date, as used to calculate the cash equivalent in the Calculating the cash equivalent for active and deferred members section:
MEMDEB = Member's pension at transfer date x appropriate percentage / 100
SURDEB = Survivor's pension at transfer date x appropriate percentage / 100
PREGMPDEB = PRE GMP at transfer date x appropriate percentage / 100
POSTGMPDEB = POST GMP at transfer date x appropriate percentage / 100
When the member retires, the total pension is calculated in accordance with the Regulations, initially ignoring the pension debit. The pension is then reduced to allow for the pensions debit. The debit should be revalued from the transfer date to the date of retirement.
If the member's pension comes into payment at any other time other than retirement age, the debit applied should be adjusted. The pension debit applied to the member's pension is reduced if the benefits are put into payment before age 65 (age 60 for special members), irrespective of whether or not the retirement is on grounds of ill health. This is because the debit will be applied over a longer period than was assumed in calculating the original amount of the debit, and so a lower amount should be deducted.
For a member who retires over aged 65 (age 60 for special members), the debit applied should be increased. This is because the debit will be applied over a shorter period than was assumed in calculating the original amount of the debit, and so a higher amount should be deducted.
The pension debit will be:
Pension debit = MEMDEB x PI x MEMERFret
Where:
MEMDEB is the pension debit at the transfer date - see the above formulae
PI is the pension increase uprating factor between the transfer date and the date of retirement
MEMERFret is the early/late retirement factor at retirement age - Table L1, LS1, L2, L2S, M1 or M1S, as applicable
There is a complication where the member is aged 60 and over and would be entitled to the immediate payment of a pension if they left on the transfer date. The complication is that we do not know when the debit can be deducted. In these cases, the pension debit will be:
Pension debit = MEMDEB x PI x MEMERFret / MEMERFtrd
Where:
MEMDEB is the pension debit to the member's pension at exit
PI is the pension increase uprating factor between the date of exit and the date of retirement
MEMERFret is the early retirement factor at retirement age, based on member's age in years and complete months- Table L1, L1S, M1 or M1S
MEMERFtrd is the early retirement factor at member's age (in years and complete months) at the transfer day - Table L1 or L1S
This adjustment for members aged 60 and over does not apply to the debit applied to the future spouse, civil partner or other qualifying partner's pension, or the debit applied to the GMP.
The benefits payable to a future spouse, civil partner or other qualifying partner who is eligible to a pension on the member's death should be reduced by the survivor's pension debit, revalued using the pension increase uprating factors. No spouse or civil partner's benefits will be payable to the person who was party to the divorce resulting in the pension sharing order (except in the unlikely situation that the member remarried or entered into a new qualifying partnership with his or her ex-partner).
No debit will be applied to a child's pension.
No debit will be made to the lump sum death grant payable to firefighters who were contributing to the scheme at their death.
For the purpose of determining aggregate pension contributions, the member's aggregate pension contributions paid before the effective date of the pension share should be reduced by a debit equal to the percentage ordered by the Court.
