Following divorce or dissolution, when determining how marital assets should be split, the courts will include the value of any pensions within their calculations, including NHS pensions. Whether an NHS pension can be split between you and your ex-spouse following divorce will depend on the value of the pension fund and your needs. NHS pension splits are treated in the same way as other (i.e. non-NHS) occupational or private pension divorce splits. Depending on the circumstances, the court may grant a Pension Attachment Order or Pension Sharing Order to split an NHS pension between its scheme member and their former spouse.
What is CETV in an NHS pension?
The NHS pension Cash Equivalent Transfer Value (CETV) refers to the monetary value of a scheme member’s NHS pension and any associated pension benefits; in other words, it is the total NHS pension fund value.
It is important to bear in mind that for divorces in Scotland, only NHS pension scheme membership relating to the period of the marriage will be used when calculating the CETV. In England and Wales, all NHS scheme membership is considered – not just the period of the marriage or civil partnership.
At the start of the process of splitting your marital assets, you will need to request the CETV of your NHS pension from the official NHS pension scheme actuary. A request for a CETV for an NHS pension can be made by the member or their spouse or civil partner (with written permission), the family law solicitor handling the matter (again with written permission only), or at the request of the court. When making the CETV, the date of any court appointment or court order deadline (if one has been set) should be provided to ensure that the value is provided within the timescale needed. You will usually receive the CETV of your NHS pension within 3 months.
A charge of £408 may need to be paid when requesting a CETV value, but only if the pension is already being paid out, the information is required within 6 weeks, or if the value has already been provided in the last 12 months. Court-ordered pension values are provided at no cost.
Pension attachment order on an NHS pension
When a Pension Attachment Order (or Earmarking Order) is issued by the court in relation to an NHS pension, the scheme trustees are required to pay part of the pension to the member’s former spouse after divorce from when the pension starts being drawn down by the member. This may be in the form of regular payments, a lump sum, death benefit or additional voluntary contributions benefit. It is important to remember that with a Pension Attachment Order, the pension remains in the sole name of the original pension member; as such, this approach does not allow for a clean financial break following divorce.
It is also important to understand the concept of ‘Pension Debit’. Pension Debit refers to the value of the member’s pension after it has been reduced by the percentage given to the former spouse in the divorce settlement. When the NHS Pension member retires, the Pension Debit is corrected to account for inflation and deducted from the benefits they receive.
Another consideration is that with a Pension Attachment Order in place, any regular payments will stop when the ex-spouse receiving payments from the pension of their former spouse remarries. This is also the case in the event of the death of either spouse.
Pension sharing order on NHS pension
A Pension Sharing Order on an NHS pension enables part of the member’s pension to be split for the benefit of their ex-spouse. Using this approach, two separate pension pots are formed after divorce. The key benefit of Pension Sharing Orders is that they provide a financial clean break between divorcing parties.
If a Pension Sharing Order is issued by the courts in relation to an NHS pension before the scheme member retires, it will create a Pension Debit that increases with the cost of living and is deducted from the total pension. On the other hand, if the Pension Sharing Order is issued after a scheme member retires, any regular payments to the scheme member will be reduced.
Another benefit of a Pension Sharing Order is that the remarriage of a former spouse does not lapse the NHS pension payments.
