Amendment to Pensions Authority Guidance Notes on the Pension Provisions of Family Law Act 1995, Family Law (Divorce) Act 1996 & Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010

4 November 2015: The Authority has revised the wording of paragraph 222 of its Guidance Notes on the Pension Provisions of the Family Law Act 1995, Family Law (Divorce) Act 1996 & Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010. The former version and the revised version of paragraph 222 with highlighted changes are set out below.

Paragraph 222 deals with the scenario where a pensions adjustment order (PAO) is in place over a scheme member’s retirement benefit who subsequently leaves service and opts to take a transfer payment to another scheme or arrangement. It specifically addresses a situation whereby no steps have been taken to create an independent benefit for the PAO recipient.

Paragraph 222 has been revised to clarify that the transfer payment should relate only to the member’s residual benefit. A full transfer payment should not be made to the new scheme or arrangement and the designated benefit of the PAO recipient does not transfer.

The legal basis for this amendment is set out in section 12(15) of the Family Law Act 1995, section 17(15) of the Family Law (Divorce) Act 1996 and sections 124(2) and 190(2) of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010. These sections require that where a PAO is made, the amount of retirement benefit payable in accordance with the rules of the scheme to or in respect of the member be reduced by the amount of designated benefit payable under the order.

Previous version:

“s12(8)-95, s17(8)-96, s123(5)-10, s189(5)-10

222. The member spouse, member civil partner or member qualified cohabitant may on, or following, termination of reckonable service choose to have a transfer payment applied on his/her behalf under another scheme in lieu of retaining any deferred retirement benefit in the scheme. In such circumstances, the trustees may choose to transfer the then value of the designated benefit in accordance with the provisions of paragraphs 277 and 278. Where the trustees elect not to effect such a transfer, the calculation of the designated benefit is as set out in paragraphs 113 to 118 and the principles governing its payment are the same as those applying where the member spouse, member civil partner or member qualified cohabitant retires from reckonable service.”

New version:

“s12(8)-95, s12(15)-95, s17(8)-96, s17(15)-96, s123(5)-10, s124(2)-10, s189(5)-10, s190(2)-10

222. The member spouse, member civil partner or member qualified cohabitant may on, or following, termination of reckonable service choose to have a transfer payment applied on his/her behalf under another scheme or approved insurance policy or contract in lieu of retaining any residual deferred retirement benefit in the scheme. The transfer payment will exclude the value of the designated benefit which will remain in the transferring scheme. In such circumstances, the member spouse, member civil partner or member qualified cohabitant will cease to be a member of the scheme and the trustees may choose to transfer the then value of the designated benefit in accordance with the provisions of paragraphs 277 and 278. Where the trustees elect not to effect such a transfer, the calculation of the designated benefit is as set out in paragraphs 113 to 118 and the principles governing its payment are the same as those applying where the member spouse, member civil partner or member qualified cohabitant retires from reckonable service.”

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For further information, contact:

David Malone
Head of Operations and Communications
The Pensions Authority

Tel (01) 613 1900

Note to Editors

The Pensions Authority

The Pensions Authority is the statutory body established by The Pensions Act 1990 to regulate occupational pension schemes, trust based RACs and Personal Retirement Savings Accounts (PRSAs) and to advise the Minister for Social Protection on overall pension policy development.