Pension Credits

If you get divorced or your civil partnership is dissolved and your ex-spouse or civil partner has pension benefits in the LGPS, the Court could award you a share of those benefits. The Court could issue a pension sharing order or the benefits could be subject to a qualifying agreement in Scotland.

When the pension sharing order is implemented you will have the choice of a ‘pension credit’ in the LGPS or transferring your share to another pension scheme. Your ex-partner’s pension fund will inform you of:

• the amount of pension that would be paid to you if you took a pension credit in the LGPS, and
• the cash equivalent value of your share should you wish to transfer it to another pension scheme.

If you do not make a decision in the relevant time period, you will be awarded a pension credit in the LGPS.

If you are awarded a pension credit in the LGPS you can still choose to transfer it to another pension scheme at a later date. However, you are not allowed to transfer if you are within 12 months of your Normal Pension Age.

You may need to take independent financial advice before you can complete a transfer. If your pension fund thinks you are at risk of being scammed they may also require you to attend a guidance appointment with MoneyHelper. Unfortunately, pension scams are on the rise in the UK. Falling victim to a pension scam could mean that you lose some or all of your pension savings. See the Avoiding Pension Scams for tips on how to protect yourself.

Pension credit benefits in the LGPS are personal benefits. You hold them in your own right and they are completely separate to those of your ex-spouse or civil partner.

No partner’s pension will be paid if you re-marry and die before the new spouse, nor will any children’s pensions be payable when you die. Children’s pensions remain ‘attached’ in full to your ex-spouse’s or ex-civil partner’s benefits in the LGPS.

Your pension credit is paid without a reduction for early payment from your normal pension age. Your normal pension age depends on two things:

• when the pension sharing order took effect
• whether your ex-spouse or civil partner was paying into the LGPS after 31 March 2014.

If the pension sharing order took effect after 31 March 2014 and your ex-spouse or civil partner was paying into the LGPS after 31 March 2014 your normal pension age is linked to your State Pension Age. This means:

• You can take the pension credit from age 55 but it will be reduced for early payment
• You can take the pension credit later than your NPA, but you must take it by age 75. If you delay payment, the pension credit will be increased.

• You may have the option of swapping part of your pension for a cash lump sum. However, this will not be possible if your ex-spouse or civil partner had taken payment of their pension before the pension sharing order took effect and they had swapped part of it for lump sum.

If the pension sharing order took effect before 1 April 2014 or your ex-spouse or civil partner left the LGPS before 1 April 2014, your normal pension age is 65.

This means:

• you can take the pension credit from age 55 but it will be reduced for early payment
• you must take the pension credit by age 65
• your pension credit can be paid from any age as a lump sum equal to five years of pension payments if you suffer serious ill health. Serious ill health means that you have less than one year to live. You should us if you wish to claim the pension credit on the grounds of serious ill health. They will arrange for an independent doctor to provide an opinion on your serious ill health.
• you will not be able to swap pension for lump sum when you take the pension credit. However, if your ex-spouse or civil partner left the LGPS before 1 April 2008 and had not already received a lump sum on the transfer date, a lump sum may be payable to you.

The date that your pension credit benefits in the LGPS are payable from is totally independent of the date that your ex-spouse or civil partner takes their pension.

The pension payable to you from the LGPS is payable for life and will increase in line with the cost of living.

If you die before the pension credit has been paid to you, a death grant of three year’s pension will be payable. This will include any cost of living increases due since the pension sharing order took effect.

If you die within five years of the pension credit being paid to you, the balance of five years of pension payments will be paid as a lump sum death grant. There will be an adjustment to this figure if you swapped pension for lump sum when you took the pension credit.

Your pension credit is entirely independent of your ex-spouse’s or civil partner’s LGPS pension. Your ex-spouse’s or civil partner’s remaining pension will not be affected if you re-marry or enter into a new civil partnership. Similarly, your pension credit is not affected by a change in your ex-spouse’s or civil partner’s marital status.

Your pension credit rights could be subject to a pension sharing order if a future marriage or civil partnership ended in divorce or dissolution.