💬 Early access to PSO pension credit due to ill-health – any experience?

fluffy_sloth

Hi all,
I'm helping someone close to me who is in a difficult situation and could really use some guidance from anyone who’s been through something similar.

They were awarded a Pension Sharing Order (PSO) as part of a divorce. It’s from the Civil Service Classic pension scheme, and the PSO has now been implemented.

The issue is this: the person is already in receipt of a Civil Service ill-health pension, awarded several years ago and still ongoing (Classic Pension - same as the PSO). They are under the normal pension age and have asked to access the PSO pension credit early—due to their established ill-health status and financial hardship.

However, the scheme has refused, saying the earliest access is 55 unless terminally ill. This doesn’t seem right, especially given they’ve already been medically retired by the same scheme. There’s now a formal complaint going through the IDR process.

Has anyone:

• Been able to access a PSO pension credit early due to ill-health?

• Gone through the IDR or Ombudsman process over this sort of issue?

• Had experience with how MyCSP or Civil Service Pensions handle similar cases?

Any insights, even if just to say "me too", would be massively appreciated.

Thanks in advance.

DE_612183

Has the other party in the divorce retired as well?

If not then I assume they cannot calculate how much pension is due as it's still been accrued.

TheSpectator

Can't see why the fact the person recieves an ill-health pension in their own right is remotely relevant here. If the other person has not accessed the pension then what is there to share. Did the PSO say anything around age at when it will be payable?  

Silvertabby

In the case of a public sector pension PSO the %age allotted is used to create a separate record - and the recipient is called a 'pension credit member'.  Regardless of when the main scheme member retires, specific rules apply to the pension credit member - ie, NRA of SPA, but may access benefits from (currently) age 55 subject to an early payment reduction.

ADD.  Just checked civil service pensions website, and it does confirm that pension credit members can only access their benefits early if they have received a terminal illness prognosis of less than 12 months, in which case the benefits may be paid as a one-off lump sum.  There are no other ill health options available.

mjm3346

Can be medically retired without being terminally ill - 55 seems right from what can I remember from 20 odd years ago

Marcon

DE_612183 said:

Has the other party in the divorce retired as well?

If not then I assume they cannot calculate how much pension is due as it's still been accrued.

 

TheSpectator said:

Can't see why the fact the person recieves an ill-health pension in their own right is remotely relevant here. If the other person has not accessed the pension then what is there to share. Did the PSO say anything around age at when it will be payable?  

You're both thinking of an earmarking order, which isn't the same thing as a pension sharing order. 

DE_612183

@Marcon

Ah, ok - the thing that confused me was the mechanics of how it works.

I'm 61 and if I retire now based on my pensionable contributions I'll get an annual pension of £30,000

If my wife and I divorced and she got a 50% sharing order - then we'd both get pensions of £15 PA.

However - what if I carried on working? My pensionable contributions would increase - or is the Sharing Order based on a line in the sand of some date? And anything after that date will be mine 100%?

Marcon

DE_612183 said:

@Marcon

Ah, ok - the thing that confused me was the mechanics of how it works.

I'm 61 and if I retire now based on my pensionable contributions I'll get an annual pension of £30,000

If my wife and I divorced and she got a 50% sharing order - then we'd both get pensions of £15 PA.

However - what if I carried on working? My pensionable contributions would increase - or is the Sharing Order based on a line in the sand of some date? And anything after that date will be mine 100%?

I'm not surprised you're confused! 'Pension sharing' is often used as a shorthand for 'doing anything' with the pensions at the time a financial order is made in respect of a divorcing couple.

As with so many things in pensions, the answer comes labelled with 'it depends' (in this case on what was agreed as part of the settlement). See https://www.moneyhelper.org.uk/en/family-and-care/divorce-and-separation/pension-attachment-and-earmarking-orders

If your (ex)wife got a 50% sharing order rather than an earmarking order, it means she was awarded 50% of the capital value of your pension(s) at the time of your divorce. Even then that's not the end of the story - the value of any defined benefit arrangement would be recalculated at the time the sharing order is actually implemented, and could be more, or less, than the amount she thought she was getting. Things are slightly in different in Scotland...

 Depending on the type of scheme you are in, she would either be able to leave her benefits in the same scheme (and become a 'pension credit' member, subject to the rules of that particular scheme) or transfer them to another arrangement of her own choosing which is willing to accept the transfer.

Where unfunded schemes like the Civil Service are concerned, transferring out isn't an option - a point I include to ensure OP doesn't get her friend's hopes up that transferring might be possible.

DE_612183

@Marcon

Once again thank you for your informative response - I've learnt something new! 

Marcon

DE_612183 said:

@Marcon

Once again thank you for your informative response - I've learnt something new! 

Glad to help. In pensions most of us learn something new all the time!!

fluffy_sloth

Thanks so much to everyone who’s replied—really appreciate the input.

To clarify a little: the person I’m helping is already in receipt of a Civil Service ill-health pension, awarded several years ago. The PSO pension credit is from the same scheme, and they’re requesting early access to it on the same ill-health grounds—since the provider has already recognised that they are permanently unfit for work.

The ex-spouse has already retired and is drawing the pension, and the PSO was backdated to the date of divorce (May 2024). However, the person I’m helping is not receiving any pension payments, even though their share of the CETV has been calculated and they are officially a pension credit member. It was a clean break settlement, and no further financial support is due from the ex-spouse.

They were financially dependent on their ex, are now 52 years old, and currently living off savings, with no capacity to return to work due to their medical condition. The concern is that the provider is refusing to even consider discretion or hardship, despite all this.

An IDR is now in progress, but if anyone has had experience with early access to a pension credit on ill-health or hardship grounds—even if rare—it would be really helpful to hear.

Thanks again.