How does a pension sharing order affect my LGPS pension?
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If the Court issues a Pension Sharing Order, or your benefits are subject to a qualifying agreement in Scotland, part of your benefits are transferred to your ex-spouse or ex-civil partner.
Your ex-spouse or ex-civil partner will hold those benefits in their own right. This is known as a pension credit.
Your pension and any lump sum will be reduced by the amount allocated to your ex-spouse or ex-civil partner at the point of divorce/dissolution. The reduction is called a pension debit.
The value of the pension debit will increase each year in line with the cost of living between the date it applies from and the date your pension is paid. When you take your pension, the increased amount will be deducted from your pension benefits. The pension debit amount will be adjusted if you take your pension before or after your Normal Pension Age.
You may wish to increase your pension to make up for the reduction following a pension share. You can find information on paying extra to increase your pension in the Paying more contributions section.
If your LGPS pension is subject to a Pension Sharing Order, you can still transfer your remaining benefits to another pension arrangement. If you transfer within the LGPS, your new fund will reduce your benefits by the pension debit when you take your pension.
Does a pension debit affect pension tax?
Each year that you pay into the LGPS, the increase in the value of your benefits is measured against the annual allowance.
The annual allowance is the maximum amount that your pension can increase by in a year before you have to pay extra tax. The reduction in your pension due to a pension debit is ignored in the year that the Pension Sharing Order or qualifying agreement is applied to your benefits.
What happens if I marry or enter into a new civil partnership?
If your LGPS benefits are subject to a pension sharing order and you:
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remarry
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enter into a new civil partnership, or
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enter into a cohabiting partnership
any spouse’s pension, civil partner’s pension or eligible cohabiting partner’s pension payable following your death will also be reduced.
If you remarry or enter into a new civil partnership and then divorce or dissolve your civil partnership again, your remaining pension rights can be subject to a further reduction. A Pension Sharing Order cannot be issued if an earmarking order has already been issued against your LGPS pension. Similarly, an earmarking order cannot be issued if your pension benefits are already subject to a Pension Sharing Order.