Pensions are often one of the most valuable assets which may need to be divided upon divorce. It’s important to approach NHS pensions with caution.
With each scheme having its own nuances to consider, pensions are a particularly complicated subject. It is vital that you seek legal advice, not only in respect of the divorce process generally, but in particular, the division of any pension assets.
NHS pensions must be approached carefully as there is not simply one set of rules that applies to every NHS pension. Members rarely understand the full extent of the benefits associated with their scheme and advice from an expert with appropriate experience will be necessary.
What information about your NHS pensions do you need for divorce?
You can request information regarding your pension by contacting NHS pensions directly. This will inform you which schemes you are a member of; you may be a member of more than one.
It will be necessary to disclose the value of your pensions when resolving financial matters but delays can be encountered when obtaining the valuations. It is therefore sensible to request a relevant value (CETV) at the earliest opportunity.
The CETV represents that capitalised value of the pension rights and associated rights accrued by the member.
The schemes have some fundamental differences. The features of each scheme are summarised in the table here.
NHS pension sharing and divorce
Pension sharing is where some of the pension member’s rights are transferred to their spouse or civil partner.
If it is agreed that an NHS pension will be shared, it is not as simple as dividing the CETV equally. In order to consider the appropriate division, it is advisable to seek the assistance of a Pensions Actuary. The Pensions Actuary will be able to consider the full extent of the pension benefits associated with the scheme and compare the pension with other pensions held by the parties, providing advice regarding the most efficient way to divide the pension assets, considering offsetting options and pre-marital accrual if necessary.
Once it has been established what portion of the scheme holder’s pension will be shared with the other, it will be necessary to prepare a pension sharing annex, stipulating the division, expressed as a percentage.
The Pension sharing order can only be implemented once the consent order is approved and decree absolute pronounced. It is important to note that pension sharing orders are only possible for spouses who are divorcing or dissolving their civil partnership, they are not available in the context of an unmarried couple or a couple who wish to separate rather than divorce or dissolve their civil partnership. It is possible to affect a pension share regardless of whether the pension is already in payment.
The party receiving the pension credit will become a pension member in their own right, rather than transferring the credit to an external scheme; it is not possible to transfer the received pension credits to another pension scheme.
The date at which the receiving party’s NHS pension would be payable will be dependent upon which scheme is being shared. For example, if the relevant scheme is in the 1995 Section, the normal pension age is 60, in the 2008 Section it is 65 and in the 2015 Scheme it is either 65 or state pension age, whichever the later.
In instances when the parties have significant pension assets, the impact of sharing on the parties’ lifetime allowances may also need to be considered.
It is important to ensure that appropriate advice is sought in this respect to avoid any adverse consequences.
What are the costs in respect of NHS pensions in divorce?
The primary costs that you will need to consider are:
Obtaining the CETV
Members are entitled to receive confirmation of their CETV once every 12 months free of charge, however, a charge of £408 will apply under the following circumstances:
- If the pension is already in payment;
- If the CETV is required within 6 weeks; or
- If a CETV has already been provided within the previous 12 months.
Seeking Actuarial advice
This will depend on the expert instructed and the complexity of the issues that need to be addressed. Usually, the costs of instructing a Pensions Expert are shared between the parties.
Pension implementation charge
The cost is currently £1693.56, although this may change in the future. This charge is often shared equally, but it will depend on the agreement reached in this respect.
In light of the complexities and significance of NHS Pensions within divorce proceedings, it is important to ensure that appropriate expert advice is sought from a lawyer who is familiar with the pension schemes and able to identify and address the various issues that need to be considered.
If you would like to discuss your NHS pension with a member of our team, please get in touch.
This article is part of a series of articles for medical professionals. Other articles include: