Pension Sharing and Earmarking
In the event of divorce, nullity, judicial separation or dissolution of civil partnership, a court may order a pension scheme to pay all or part of a member's entitlement to pension to their former spouse or civil partner. This could be in accordance with an earmarking order or a pension sharing order. You and your partner will, therefore, need to consider how to treat your pension rights as part of any divorce or dissolution settlement.
An earmarking order could apply to all or part of your retirement pension, potential lump sum, or possibly your death grant. If you have already retired, the order may require immediate payment of pension to your former spouse or civil partner. If you are an active or deferred member the order would not have effect until the benefits become payable.
A pension sharing order would have immediate effect. The court would instruct that a percentage of the value of your benefits should be deducted to provide "pension credit rights" for your former spouse or civil partner.
The pension credit rights would remain in the Firefighters Pension Scheme until they are eligible to draw them at the scheme’s normal retirement age (or put into immediate payment if he or she has already reached that age). The pension credit can be commuted to provide a lump sum. It cannot be transferred to another pension arrangement. If the pension credit member dies before, or within five years of, payment of his or her pension, a death grant would be paid. There are no survivor pensions attached to a pension credit.
The court will normally expect both parties to provide information about the current and prospective value of their pension rights together with the rules of the pension scheme(s) in which those rights are held. The authority's pensions administrator can provide this for you and can give you general information on the impact that divorce or dissolution may have on pension rights.
You may be asked to provide your solicitor or representative with a quotation of what is called the ‘cash equivalent value’ (CEV) of your pension rights. This may also be described as a ‘fund value’ or ‘transfer value’; they all represent the value of your rights in the Firefighters Pension Scheme. The Court will take this value into account in your settlement.
You can request this information by completing the PSO2 Consent Form and returning it to the Pensions Administrator.
If you have other pension rights, you will need to approach each scheme separately to request a value of each fund.
Effects on pension benefits
The Court may use the CEV to offset the value of your pension against other assets in the divorce or dissolution settlement. Alternatively, it may issue a Pension Sharing Order or an Earmarking Order against your pension.
A Pension Sharing Order is the court’s instruction to us to give a percentage of the member’s CEV to the former partner as a standalone pension entitlement. This will also reduce the member’s benefits up to the date of the order by the same percentage.
An Earmarking Order will instruct us to make a cash payment from your pension to your former partner.
If there are any charges which apply, a list of charges will be supplied at the start of the process.
Under the Firefighters Pension Scheme, if you get divorced or a civil partnership is dissolved, you may wish to note that:
- your former partner will cease to be entitled to a widow’s, widower’s or civil partner’s pension should you die before them
- any children’s pension payable in the event of your death will not be affected by your divorce or dissolution
It is recommended that you complete a new Death Grant - Nomination of recipient form if your circumstances change, so that the Pensions Administrator is clear about your intentions. Please note however that the Court may issue an Earmarking Order stating that all or part of any lump sum death grant is payable to your ex-spouse or civil partner, which must be respected.
What else do I need to do?
Remember, should your assets be offset without the need for the Courts involvement, please inform the Pension Administrators of any change in your marital status.