Where relevant, for the remainder of this note 'CETV' should be taken to mean either a Cash Equivalent Transfer Value on divorce or pensioner cash equivalent on divorce.
The benefit provided is a pension paid from the ex-partner's normal pension age (NPA), of 60. The benefits are paid immediately if the ex-partner is already above their NPA (60). On death after retirement of the ex-partner, a lump sum of five times the annual pension less the benefits already received is paid. The pension benefit will increase in line with prices in deferment and payment.
A lump sum of three times the pension is paid to the ex-partner on retirement if the member had not received a lump sum at the time of pension share.
The ex-partner's share of the CETV should be calculated using the proportion specified in the pension sharing order.
The factors should be selected according to the ex-partner's age at the calculation date and sex. The factors in this note should only be used to calculate the benefits for the ex-partner if the CE (and hence Pension Credit) has been calculated using consistent factors (as described under the Introduction: Implementation and Review section). If there is any doubt over which factors should be used, please contact GAD.
The calculation of the pension credit depends on whether the member has already received a lump sum. The relevant formulae are set out in paragraphs below.
If the member has previously received a lump sum at the transfer day, then the pension amount is the ex-partner's share of the CETV divided by the relevant pension factor for an ex-partner:
Pension amount = Share of CETV / FxP
FxP is the factor "Gross Pension of £1 per annum" for an ex-partner aged x from table 804 for males or 814 for females. (Tables 0-306 and 0-307 respectively in consolidated factors spreadsheet.)
If the member has not previously received a lump sum at the transfer day, then the pension amount is the ex-partner's share of the CETV divided by the sum of the relevant pension factor for an ex-partner and three times the relevant lump sum factor for an ex-partner:
Pension amount = Share of CETV / (FxP + 3 x FxLS)
FxP is the factor "Gross Pension of £1 per annum" for an ex-partner aged x from table 804 for males or 814 for females. (Tables 0-306 and 0-307 respectively in consolidated factors spreadsheet.)
FxLS is the factor "Lump Sum of £1" for an ex-partner aged x from table 804 for males or 814 for females. (Tables 0-306 and 0-307 respectively in consolidated factors spreadsheet.)
A UKAEA pension credit member who retires early (i.e. before age 60 years) will have their pension credit related benefits reduced for early payment. The early payment reduction will be applied to the pension credit member's benefits in line with the voluntary early retirement guidance note.
Alternatively a pension credit member retiring early can buy out the actuarial reduction. Such cases should be referred to GAD.
A pension credit member who has entitlement to a retirement lump sum by virtue of a conversion of pension credit to pension can choose to commute their lump sum for a self only pension. The terms of conversion will be applied in line with the inverse commutation guidance note.
