What happens on divorce?
If a member is going through a divorce the court is required to take the value of both parties pension rights into account when valuing the matrimonial assets.
This is also covered in more detail in the Divorce module.
The member must provide a transfer value to the court and the options for dealing with the benefits are:
Offsetting
- The pension rights are offset against other financial assets such as the family home.
- This option will only be available if there are other assets of a comparable size to the pension rights.
Earmarking
- An attachment order is made against the member’s benefits that comes into effect when the benefits come into payment.
- The earmarked pension ceases when the member dies.
- The pension reverts to the member if the ex-spouse dies or remarries.
Pension Sharing
- The pension rights are shared at the time of the divorce thereby offering a "clean break”.
- The ex-spouse will acquire pension benefits in their own right.
- The ex-spouse’s pension may remain in the member’s pension scheme or the scheme rules may insist that ta transfer value is paid for the ex-spouse to set up their own arrangement.
