General Information
Divorce and Pensions
You can find top level details about what happens to pensions in divorce proceedings on this page. If you are getting divorced you should seek legal advice as the options are complex.
For many years now, courts in England, Wales and Scotland have been taking pension benefits into account in divorce settlements and have been able to allocate some - or all - of a member's pension benefits to the ex-spouse on divorce.
The courts have three options when considering pension rights in the event of a divorce:
1. Earmarking
The courts can ‘earmark’ all, or part, of the member's pension and any lump sums that may be payable on the death of a member to be paid to the ex-spouse.
However, earmarking isn't necessarily an advantage to the ex-spouse as pension payments will cease if the member dies or the ex-spouse remarries.
2. Offsetting
The value of a member’s pension benefits can be offset against other joint assets that are being divided in the settlement. For example, a member's pension may be offset against the value of a savings account or property that are jointly owned.
This option can only be used if there are sufficient assets to offset the pension benefits against.
3. Pension sharing
With pension sharing, the Cash Equivalent Transfer Value (CETV) of the member's pension rights is split between both parties with the amount of the split being determined by the court. The member will then receive a reduced pension and the ex-spouse will receive a sum of money which will be used by them to purchase a pension outside of IBM.
Pension sharing applies to all of a member's pension benefits both within IBM and other schemes, with the exception of the Basic State Pension.
If you need a Cash Equivalent Transfer Value for divorce proceedings, please get in touch with your Pensions Officer for details and you should tell them that the calculation is specifically for divorce purposes. The transfer value included in your annual Pension Benefit Statement can't be used as it doesn't include some statutory requirements.
Charges The calculation for the CETV is carried out by the Scheme Actuary and the cost is met by the pension fund for the first CETV for current members. If a further calculation is required within a twelve month period there will be a charge which is dependent on the type of pension plan you are in. The charges are currently:
Defined Benefit - £229.13
Defined Contribution - £150.00
Defined Benefit and Defined Contribution - £300.00
In addition, if your pension is subject to a Pension Sharing Order, further charges will be incurred.
Need more information?
If you need further information about divorce, you can check out these websites:
IBM (UK) Pensions Trust Limited is not responsible for the content of any external websites.
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IT IS IMPORTANT TO TAKE LEGAL ADVICE |
Last Updated: 15/06/2009
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