When a pension sharing order is received from the Court, the first stage is to check that all the necessary information has been provided and any charges requested at this stage have been paid. The value of the member's benefits should be recalculated at the calculation date which will be the "transfer day", as described in the Cash Equivalent valuation section.
For divorces under English law, or for divorces in Northern Ireland, the pension sharing order will specify the percentage of the member's benefits that the ex-partner will be entitled to. The member's cash equivalent (CE) obtained in the paragraph above should be multiplied by this percentage, to give the value of the ex-partner's benefits, or the ex-partner's cash equivalent (ESCE):
ESCE = (CE x appropriate percentage / 100) - Charges
Where:
CE is the cash equivalent of the member's benefits at the calculation date
Charges are any charges to cover the cost of the work generated by the pension sharing order, which the fire authority have decided should be deducted from the value of benefits awarded to the ex-partner
Under Scottish law, the pension sharing order will usually specify a monetary amount (MA). The percentage of the member's benefits that the ex-partner will be entitled to should be calculated as the ratio of the monetary amount and the cash equivalent:
appropriate percentage = (MA / CE) x 100
When the appropriate percentage is used to calculate the ex-partner's cash equivalent as in the above, the ESCE will be equal to the monetary amount specified in the order, less charges.
The ESCE calculated in this way should be used to derive the pension credit available to the ex-partner.
The shareable rights of the ex-partner should be applied to establish a pension credit member's account under the 2015 Scheme Regulations.
The main benefits for a pension credit member are:
- A pension payable for life from the pension credit member's deferred pension age (with no dependants' pensions payable on death). If the pension credit member has already attained their deferred pension age at the calculation date, the pension credit is payable immediately.
- Part of the pension can be commuted for a cash sum at its commencement so long as the member whose pension rights are being shared had not commuted a part of his or her pension for a cash sum on retirement or on flexible retirement where the date of retirement or flexible retirement was prior to the calculation date used for implementing the pension sharing order.
- A lump sum on death, payable to the pension credit member's beneficiaries, in accordance with the 2015 Scheme Regulations.
- The pension is increased in accordance with the Pensions Increase Act with effect from the calculation date
The calculation of the pension credit will depend on the gender of the ex-partner, their deferred pension age and their age at the calculation date. Do not use the deferred pension age, gender or age of the member. The pension credit member's deferred pension age is the higher of age 65 and their State Pension age.
The pension credit as at the calculation date will be.
PC = ESCE / FP
Where:
ESCE is the ex-partner's share of the cash equivalent as calculated in the Calculation of the value of shareable rights section.
FP is the factor for pension for ex-partner from Table C1 or C2
Where an ex-partner has a non-integer normal pension age (NPA), then factors should be interpolated using the same methods as used for calculating transfer payments for the purposes of The Public Sector Transfer Club.
For an ex-partner with a normal pension age of n years and m months the main pension factor would be:
FP (NPA n years, m months) = FP (NPA n) + (m/12) x [FP (NPA n + 1) - FP (NPA n)]
Where:
FP(NPA xx) is the factor applying for a normal pension age of xx
An ex-partner may have a normal pension age that falls on a specified date. This may mean that their NPA is based on years and days rather than years and whole months. For such an ex-partner the main pension factor would be:
FP (NPA n years, m days) = FP (NPA n) + (m/365) x [FP (NPA n + 1) - FP (NPA n)]
Where:
FP(NPA xx) is the factor applying for a normal pension age of xx
For the avoidance of doubt, if the State Pension Age changes, the debit will become payable from the revised State Pension Age. There will be no adjustment to the debit in respect of such a change, it should be treated as if the new State Pension Age had applied at the time of the calculation.
