In any divorce financial settlement, the Courts require all divorcing couples to take account of pension assets when considering the overall wealth and assets held by each person. It was not until the early 2000s that it became possible to share pension assets between spouses on divorce.
It is possible to transfer the value of pension benefits or the pension benefits themselves between married couples as part of any financial settlement. However, if one party holds a military pension, it is vital that the scheme benefits are considered carefully as not all elements of a military pension can be made the subject of the pension sharing order.
In order to ascertain the current value of the pension, a military pension holder must apply to their Service Personnel and Veterans Agency (SPVA) for a “Cash Equivalent Valuation” or a CEV.
Military pensions can be made up of the following elements;
1. Armed Forces Pension Scheme (AFPS) – This part of the pension is shareable and can be made the subject of the pension sharing order.
2. Service Invaliding Pension (SIP) – This is awarded if a service member is forced to retire on the grounds of ill health. This element of the pension is shareable and can be made the subject of a pension sharing order.
3. Service Attributable Pension (SAP) – This element of the pension is payable to veterans who experience injury, illness or death in service. It is based on rank and the degree of disability. The SAP cannot be made the subject of a pension sharing order.
4. War Disablement Pension (WDP) – This is awarded if a veteran becomes disabled due to service in the armed forces. It cannot be made the subject of a pension sharing order.
It is absolutely vital that you take legal advice at an early stage if you are considering a divorce and you are a military pension holder or are married to one. Your solicitor will be able to advise you on the pension sharing procedure and may instruct an actuary (pensions expert) on your behalf who will be able to accurate calculate how much of the pension is shareable so you are able to preserve as much of your benefit as possible.