I am getting divorced

There are three main methods available for taking pension benefits into account when dealing with divorce financial settlements in the UK. These are ‘offsetting’, ‘earmarking' and ‘pension sharing’.

• Offsetting - is used where there are other assets available to set off against the pension. The spouse does not obtain any pension rights. However, the values of the benefits are taken into account when sharing out other assets of the marriage.
• Pension attachment (Earmarking) - allows pension benefits to be allocated to the spouse when the benefits become payable.  With this method the Member of the pension scheme retains control of the benefits.  The spouse only receives the allocated pension whilst the member spouse is also receiving pension benefits.  Should the member spouse predecease the spouse with earmarked benefits, the pension to the spouse will also cease.
• Pension sharing - a pension share can only be made by a court order. Where a pension sharing order is made, the court will inform the Trustees of the pension scheme of the percentage amount of the Member’s pension benefits to be allocated to the spouse at the time of divorce. The pension benefits acquired by the spouse as a result of a pension share (known as the Pension Credit) are separated from the pension benefits of the spouse who is a member of the scheme. This then ensures a ‘clean break’ between the parties in respect of the pension. Please note - the Trustees of the USPS scheme have decided that the spouse must transfer any Pension Credit benefits out from USPS.

The most appropriate method to use will depend on the circumstances of the divorcing couple and the required outcome.

Legal advisers will, therefore, often ask Members to request the value of any pension benefits to assess against other assets of the marriage. If you require a Cash Equivalent Transfer Value (CETV) for divorce purposes, you will need to specify in your request that you require it for your divorce. There may be a charge for providing this information.

Under ordinary circumstances, an active member of a pension scheme would not be entitled to a CETV, as this continues to change as you build up more service each month. However, the Scheme Actuary can calculate a CETV using a specified point in time. As such, it is always helpful if you can give the Pensions Office as much notice as possible of your requirements, in case the Actuary needs to be involved in your case.

If you do decide to have a pension sharing or pension attachment (earmarking) order, it is usually helpful if the pension scheme can comment on any draft order to ensure your request can be met by the Scheme.

You may also wish to update your ‘Expression of Wish’ form regarding your nomination to receive death benefits if your wishes have changed.

You can also read a copy of the ‘Scheme’s Divorce Policy’ booklet, prepared by the Scheme administrators.

 

Need help or more information?

Who to contact
If you have any queries then please contact the Pensions Office.