Outline the spouse’s options for Pension Credit, including the value of their share of the pension as directed by the "Pension Sharing Order", the right to a CETV to a qualifying arrangement (which can be exercised at any time up to 12 months before age 65), and the default option if the spouse does not indicate a choice in writing (NB: it will be necessary to include a deadline, well within the 4 month "implementation period", for the spouse to make an active choice. Failure to make an active choice within the deadline will result in a Pension Credit being awarded in the LGPS).
44. Once the notice of implementation has been issued it will be necessary to then set about calculating the CETV (or valuation in respect of a pensioner) in respect of the member's pension rights (see annexes 7 and 8 for details of the calculation process). The relevant percentage (or, in the case of divorce or nullity proceedings lodged in Scotland, an amount may be specified) of the CETV (or valuation) as indicated in the "Pension Sharing Order" will be granted to the "ex- spouse" (or the whole of the CETV if the amount specified in a Scottish Order is more than the CETV) – see note below. The Pension Debit to be applied to the member and the Pension Credit to be awarded to the "ex-spouse" are to be calculated in accordance with guidance issued by the Government Actuary (see annex 5).
Note:
Rule 9 of the Family Proceedings (Amendment) Rules 2000 [SI 2000/2267(L.19)] replaced rule 2.70 of the Family Proceedings Rules 1991 with a new rule 2.70.
New rule 2.70(14)(f) states that where a provision is made under section 24B (pension sharing) of the Matrimonial Causes Act 1973 there shall be an annex to the Pension Sharing Order which, amongst other things, must state the specified percentage, or where
appropriate the specified amount, required in order to calculate the appropriate amount for the purposes of section 29(1) of the Welfare Reform and Pensions Act 1999 (WRPA’99). Section 29 of the WRPA '99 states that the pension debit and the pension credit shall be equal to the appropriate amount which
a) if the Pension Sharing Order or provision specifies a percentage value which is to be transferred, is the amount of the cash equivalent on the valuation day that the specified percentage produces, or
b) if the Pension Sharing Order or provision specifies an amount, is the amount so specified or, if less, the cash equivalent of the member's benefits on the valuation day.
In England and Wales, the amount of the debit will be a percentage of the cash equivalent of the member's pension rights in the scheme (as provided for by section 19 and schedule 3 of the WRPA '99 which introduced section 21A into the Matrimonial Causes Act 1973). Section 21A of the 1973 Act says that"For the purposes of this Act, a pension sharing order is an order which -
(a) provides that one party's-
(i) shareable rights under a specified pension arrangement, or (ii) shareable state scheme rights,
be subject to pension sharing for the benefit of the other party, and (b) specifies the percentage value to be transferred."
The percentage will be shown in the Pension Sharing Order or agreement.
In Scotland, the Pension Sharing Order or agreement may specify that the pension sharing legislation is to apply in relation to a specified amount, rather than a percentage, of a member's pension rights (as provided for by section 20 of the WRPA '99) and, in that case, the amount of the debit will be that specified amount or, if less, the current cash equivalent of the member's rights.
A standard form (P1) – see annex 14 - has been devised by the Court Service to meet the requirements of the relevant legislation in respect of the annex to be attached to a Pension Sharing Order. At item 5 on form P1 "the specified percentage value of the pension arrangement to be transferred" has to be entered. It also states "The specified amount required in order to create a pension credit and debit should only be inserted where specifically ordered by the court".
Although it appears from the above that in England and Wales a Pension Sharing Order should specify a percentage (whereas in Scotland a percentage or a cash sum can be specified) it is known that, even in England and Wales, Orders are being issued specifying a cash sum. It would appear that this is being done to deal with the problem of long delays between the agreeing of a settlement and the decree of divorce becoming final. If an administering authority
receives a draft Pension Sharing Order relating to a divorce in England or Wales which specifies a cash sum, the administering authority should politely point out that the relevant legislation only appears to permit a percentage to be specified. If, however, an actual Pension Sharing Order is received which specifies a cash sum this should be implemented, subject to the administering authority being able to otherwise comply with the Order, on the basis that the Court has approved the Order.
45. This leads to Stage 4 of the process unless the "ex-spouse" dies
before the administering authority discharges liability by implementing the "Pension Sharing Order".
46. If the "ex-spouse" does die before the administering authority discharges liability, the administering authority must send a letter to the person nominated on any death grant expression of wish form completed by the "ex-spouse" (or any other person the administering authority considers appropriate). The letter must be issued within 21 "days" of receipt of the notification of death and must:
• state how the administering authority intends to discharge the Pension Credit i.e. by paying, at its sole discretion, a lump sum death grant;
• detail any other information needed to implement the "Pension Sharing Order"; and
STAGE 4
Stage Four: Provision of information after the implementation of a "Pension Sharing Order" or provision - Regulation 8 of the
Pensions on Divorce etc. (Provision of Information) Regulations 2000 [SI 2000/1048]
47. The Pension Credit granted to the "ex-spouse" must be discharged by the scheme within 4 months of the latter of the two dates in item (ii) of Box 6 (unless the "Pension Sharing Order" is subject to an
application for leave to appeal in which case the Order is stayed until the appeal is determined) but, in England and Wales, cannot take effect earlier than 7 "days" after the end of the period for filing a notice of appeal against the Order. In effect, the Order will be stayed until the period allowed for an appeal 'in time' has lapsed. The period will be set in accordance with the level of the Court in which the jurisdiction is exercised and the period provides time for the parties to appeal. If an appeal is begun during this period the Order will not take effect until the appeal is disposed of.
In the case of divorce or nullity proceedings lodged in Scotland, a "Pension Sharing Order" will take effect on the day the Order is made. However, the appeal process must be completed before the extract decree or declarator is issued. If an appeal is marked, the parties will not be able to send the relevant documentation to the administering authority until the appeal process has been completed. The 4 month "implementation period" will not begin until the
administering authority receives that documentation.
48. Once the necessary splitting calculations have been performed within the 4 month "implementation period", it will be necessary to issue a notice of discharge of liability to the member and the "ex-spouse" in accordance with Box 9.
Stage 4 Box 9 Time limit: 21 "days" from completion of discharge of liability. Issue a notice of discharge of liability to the member and their "ex- spouse".
ACTION
Ø Issue a notice of discharge of liability to the member and their "ex- spouse" within the 21 "day" deadline; and
Ø Identify the two relevant boxes below, one for the member (either Box 10 or Box 11), one for the "ex-spouse" (either Box 12 or Box 13), and provide the required information within the 21 "day" deadline.
Stage 4 Box 10