Benefit reduction due to a Scheme Pays election applies in tandem with a pension debit due to a pension sharing order. The Scheme Pays benefit reduction should be carried out consistently with those described in the relevant section of this guidance (Age Retirement, Early Retirement, Late Retirement or Ill-health Retirement).

Calculations for divorce purposes are covered in the HSCPS 2015 calculation of cash equivalents and pension credits for pension sharing following divorce guidance.

If a calculation of a cash equivalent of a member's benefits for divorce purposes is requested for contributing members or deferred pensioners not entitled to an immediate pension without actuarial reduction, the pension sharing guidance states that the cash equivalent transfer value should normally be quoted. This should be calculated using the same approach as would apply to a normal non-Club transfer value, even if the member is not normally entitled to a transfer value.

The same principle applies when the member has previously elected to utilise Scheme Pays. As described in AA charge: transfer values, the gross CETV should be calculated in the usual way at the relevant date ignoring the negative DC pot. The negative DC pot should also then be determined at the relevant date. The transfer value to be quoted for divorce purposes would then be equal to the gross CETV less the negative DC pot. It may be useful to provide additional disclosures to the courts covering both the gross transfer value and negative DC balance.

For pensioner members, the benefit reduction due to Scheme Pays should already have been applied (at the point of retirement) and so the calculation of a cash equivalent of the member's benefits for divorce purposes can be carried out in the usual way.