Are Early Departure Payments included in the value of your military pension – and what do you need to do when splitting assets in a divorce?
There are three different Armed Forces Pension Schemes (AFPS) from 1975, 2005 and 2015. The general rule with Public Sector pensions is that the benefits have become less generous as time has gone on and so the best benefits will be within the older schemes.
What are Early Departure Payments?
Early Departure Payments (EDP) are built up for members of all three schemes but with different qualifying criteria. It is therefore important to understand when these benefits may be accessible when assessing the resources available to divide between a divorcing couple. For example, AFPS 2005 scheme members who leave the forces aged over 40 and with at least 18 years’ service will be entitled to Early Departure Payments (a lump sum and a monthly income) in the lead up to them reaching the normal retirement age for their pension which is 65.
The Early Departure Payments increase when they reach the age of 55 and is index linked from then. The EDP rules differ for 2015 scheme holders and also for 1975 scheme members if they leave the forces before age 55.
Are Early Departure Payments included in the pension value?
EDPs are not part of the pension value and would therefore not be shared by equalising or otherwise sharing pension benefits in isolation.
If an element of the Armed Forces Pension and associated benefits have been accrued by the scheme member before they even lived with their spouse, that element of the scheme (and associated Early Departure Payment entitlements) will be “non-matrimonial property”. That element is only shareable with their spouse if required to meet needs and so that would be the focus of the settlement negotiations.
What should you do to ensure a fair split of assets?
Actuarial advice is essential to achieve a fair division of pension assets and wider benefits for Armed Forces Pension Scheme members on divorce as lawyers are not qualified to calculate the effects in terms of income and lump sum benefits of various pension sharing options.
Usually an actuary is jointly instructed by both spouses’ solicitors to advise on the effect of various ways to share the pension provision and EDPs, and give them the information they need to negotiate a settlement.
The important point to note is that military pensions and associated benefits are a specialist area and expert advice should be taken where they feature in any divorce proceedings.
Several of our family lawyers have expertise in dealing with military pensions and are happy to help.