Where a pension sharing order is issued by the Court, the ex-partner is allocated either a percentage (up to 100%) of the member's benefits, or a monetary amount (which can be converted into a percentage by dividing this monetary amount by the cash equivalent value of the member's total benefits). The member's benefits are reduced accordingly, and the ex-partner will hold benefits in their own right, independent of the member.
The member's benefits will be reduced by the percentage allocated to their ex-partner. This reduction is known as a 'pension debit'.
Where the member is a pensioner, the debit will apply to the member's own pension with effect from the transfer day, 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 deferred pension age. If the member retires at an earlier age, the debit will be reduced. 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 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 or Northern Ireland. 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 will be:
MEMDEB = P x appropriate percentage / 100
The debit applying to any future surviving qualifying partner's pension will be:
SURDEB = SUR x appropriate percentage / 100
The debit applying to the GMP pension will be:
PREGMPDEB = Gpre x appropriate percentage / 100
POSTGMPDEB = Gpost x appropriate percentage / 100
P, SUR, Gpre and Gpost are defined in the Pensioners section.
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 = Gpre at exit x appropriate percentage / 100
POSTGMPDEB = Gpost 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 deferred pension age, 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. The pension debit at retirement will be:
Pension debit = MEMDEB x PI x MEMERF
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
MEMERF is the early retirement factor - Table D or E, as appropriate
The responsible authority has confirmed that State Pension age for the purpose of selecting the appropriate MEMERF should be as set out in legislation in force at the retirement date.
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 calculation date, as used to calculate the cash equivalent in the Cash Equivalent valuation section:
MEMDEB = Member pension at calculation date x appropriate percentage / 100
SURDEB = Survivor pension at calculation date x appropriate percentage / 100
PREGMPDEB = Gpre at calculation date x appropriate percentage / 100
POSTGMPDEB = Gpost at calculation date x appropriate percentage / 100
If the member's pension comes into payment before deferred pension age, whether on voluntary early retirement or on grounds of ill health, the member element of the debit applied should be reduced as described in the Pension debit for a deferred pensioner section above. For the avoidance of doubt, the survivor's pension debit will not be subject to any early retirement reduction.
There is a complication where the member is aged 60 or over and would be entitled to the immediate payment of a pension if they left on the calculation date. The complication is that we do not know when the member will retire and the debit can be deducted. In these cases, the debit at retirement will be:
Pension debit = MEMDEB x PI x MEMERFret / MEMERFtrd
Where:
MEMDEB is the pension debit to the member's pension at calculation date
PI is the pension increase uprating factor between the calculation date and the date of retirement
MEMERFret is the early retirement factor at retirement age - Table D
MEMERFtrd is the early retirement factor at member's age at calculation date - Table D
The responsible authority has confirmed that State Pension age for the purpose of selecting the appropriate MEMERFret and MEMERFtrd should be as set out in legislation in force at the retirement date.
This adjustment for members aged 60 and over does not apply to the debit applied to the qualifying partner's pension, or the debit applied to the GMP.
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 pension debit. The debit should be revalued from the calculation date to the date of retirement in line with the Pension Increase Act.
The benefits payable to a future spouse, civil partner or other qualifying partner who is eligible for a pension on the member's death should be reduced by the survivor's pension debit, revalued using the pension increase uprating factors. No early reduction factors will be applied to the survivor's pension debit if the member retires before their deferred pension age.
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 event that the member remarried or entered into a new qualifying partnership with his or her ex-partner).
At the member's GMP Payment Age (or later retirement date) the GMP debit, calculated in the appropriate section above, should be increased to the member's GMP Payment Age (or later retirement date). All increases should be allowed for, including the late retirement increase of 1/7 of a percent (i.e. 1/700) a week if appropriate. The revalued debit should be deducted from the member's full GMP.
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.
