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  • FIRST POST
    • Susibee
    • By Susibee 10th Jan 19, 3:17 PM
    • 5Posts
    • 3Thanks
    Susibee
    Pension sharing order
    • #1
    • 10th Jan 19, 3:17 PM
    Pension sharing order 10th Jan 19 at 3:17 PM
    I recently discovered that a pension sharing order in my ex husband’s favour ten years ago has been ‘revalued’, i.e increased’, by my pension scheme each year since the order was actioned. This means that in addition to the original pension transfer, my pension and lump sum has been further eroded each year and I suspect will continue to be eroded in future.

    Is this a common way of dealing with pension sharing orders and do all pension schemes apply similar rules?
Page 1
    • crv1963
    • By crv1963 10th Jan 19, 3:23 PM
    • 993 Posts
    • 2,259 Thanks
    crv1963
    • #2
    • 10th Jan 19, 3:23 PM
    • #2
    • 10th Jan 19, 3:23 PM
    I recently discovered that a pension sharing order in my ex husband’s favour ten years ago has been ‘revalued’, i.e increased’, by my pension scheme each year since the order was actioned. This means that in addition to the original pension transfer, my pension and lump sum has been further eroded each year and I suspect will continue to be eroded in future.

    Is this a common way of dealing with pension sharing orders and do all pension schemes apply similar rules?
    Originally posted by Susibee
    When the order was made was there a time limit on it for it to be actioned? My ex had 5 years to do so, but it did not mean I would lose any more from my pot, she was entitled to 40% of it at the time of divorce, not at the time she actioned the order.

    Is the uplift simply the pot size earmarked for him has grown, in which case your pot has not been eroded but has also grown by the same percentage?
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • Browntoa
    • By Browntoa 10th Jan 19, 3:24 PM
    • 35,629 Posts
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    Browntoa
    • #3
    • 10th Jan 19, 3:24 PM
    • #3
    • 10th Jan 19, 3:24 PM
    If it's a deferred pension then it continues to benefit from any increases that the pension scheme gives

    https://www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change/when-relationships-end/pension-sharing
    I'm the Board Guide of the Referrers ,Telephones, Pensions , Shop Don't drop ,over 50's , Boost your income and Discount Code boards which means I volunteer to help get your forum questions answered and keep the forum runnning smoothly .However, please remember, board guides don't read every post. If you spot an inappropriate or illegal post please report it to forumteam@moneysavingexpert.com Any views are mine and not the official line of MoneySavingExpert.
    • Susibee
    • By Susibee 10th Jan 19, 3:37 PM
    • 5 Posts
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    Susibee
    • #4
    • 10th Jan 19, 3:37 PM
    • #4
    • 10th Jan 19, 3:37 PM
    The order for 30% from my pension was actioned almost immediately after our divorce. I’d been led to believe at the time that it was a full and final settlement, the transfer happened straightaway, and there was no ongoing liability, i.e everything I contributed to my pension after that was then 100% mine.

    However, as you say it looks like his pot has grown further as my pension pot and lump sum has been reduced from what it would have been without the ‘revaluation’. Looks like I was just given rubbish advice about the ongoing implications of the sharing order.
    • Silvertabby
    • By Silvertabby 10th Jan 19, 3:50 PM
    • 4,653 Posts
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    Silvertabby
    • #5
    • 10th Jan 19, 3:50 PM
    • #5
    • 10th Jan 19, 3:50 PM
    The order for 30% from my pension was actioned almost immediately after our divorce. I’d been led to believe at the time that it was a full and final settlement, the transfer happened straightaway, and there was no ongoing liability, i.e everything I contributed to my pension after that was then 100% mine.

    However, as you say it looks like his pot has grown further as my pension pot and lump sum has been reduced from what it would have been without the ‘revaluation’. Looks like I was just given rubbish advice about the ongoing implications of the sharing order.
    Originally posted by Susibee

    Are you are sure that your pension has been reduced? It is my understanding that once the PSO has been activated, then there is no further link between the two records. Yes, your ex's pension will have increased due to the application of cost of living increases, but not at the expense of your pension.
    • Susibee
    • By Susibee 10th Jan 19, 4:45 PM
    • 5 Posts
    • 3 Thanks
    Susibee
    • #6
    • 10th Jan 19, 4:45 PM
    • #6
    • 10th Jan 19, 4:45 PM
    I finished work late last year and my deferred pension statement showed, for the very first time, the revaluation of the PSO figure.

    So in effect the PSO figure has been revalued by around a thousand pounds for the pension pot and three thousand pounds for the lump sum. I now realise that my pension pot and lump sum figures have been reduced gradually by these total amounts over the last ten years. So the figures they show in my deferred statement are my full pension and lump sum pots minus the revalued figures, not the original PSO figures.

    When I asked the pension scheme why that was, all they did was tell me the calculation they used, not why they use it.
    • Silvertabby
    • By Silvertabby 10th Jan 19, 5:26 PM
    • 4,653 Posts
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    Silvertabby
    • #7
    • 10th Jan 19, 5:26 PM
    • #7
    • 10th Jan 19, 5:26 PM
    I finished work late last year and my deferred pension statement showed, for the very first time, the revaluation of the PSO figure.

    So in effect the PSO figure has been revalued by around a thousand pounds for the pension pot and three thousand pounds for the lump sum. I now realise that my pension pot and lump sum figures have been reduced gradually by these total amounts over the last ten years. So the figures they show in my deferred statement are my full pension and lump sum pots minus the revalued figures, not the original PSO figures.

    When I asked the pension scheme why that was, all they did was tell me the calculation they used, not why they use it.
    Originally posted by Susibee
    Are you sure this is a PSO and not some sort of other pension sharing agreement? With a PSO there is no way your ex's revalued pension details would be reflected on your benefit statement.

    Can you post which pension scheme you are in?
    Last edited by Silvertabby; 10-01-2019 at 5:29 PM.
    • hyubh
    • By hyubh 10th Jan 19, 5:30 PM
    • 2,559 Posts
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    hyubh
    • #8
    • 10th Jan 19, 5:30 PM
    • #8
    • 10th Jan 19, 5:30 PM
    This means that in addition to the original pension transfer, my pension and lump sum has been further eroded each year and I suspect will continue to be eroded in future.
    Originally posted by Susibee
    Do you mean, your ex-spouse had a cash-equivalent transfer value to take out of the scheme, or did he instead get a 'pension credit' membership in it...?

    When I asked the pension scheme why that was, all they did was tell me the calculation they used, not why they use it.
    Is this civil service final salary...? Assuming your ex-husband had a pension credit in the scheme (rather than a CETV to take out of it), one scenario is that your whole-time equivalent pensionable pay has failed to keep up with inflation. So, while his deferred pension has increased by CPI (this is assuming a public sector scheme), the value of your final salary pension it was taken out of has decreased in real terms. Ergo, the debit to your pension has increased to maintain the value of his pension credit.
    • Susibee
    • By Susibee 10th Jan 19, 5:56 PM
    • 5 Posts
    • 3 Thanks
    Susibee
    • #9
    • 10th Jan 19, 5:56 PM
    • #9
    • 10th Jan 19, 5:56 PM
    Good call. It is the civil service pension scheme. Both my husband and I were members of the scheme at the point of the pension sharing order (which is how it’s described in the letter I received from the pension scheme in 2009). The letter said that 30% of my benefits as at the effective date in August 2009 be transferred to him and ‘used to provide him with benefits of equivalent value’.

    The letter I received recently regarding my deferred benefits doesn’t refer directly to my ex husband’s benefits or pension details. It does show for the first time though the direct impact of the scheme revaluing the original PSO figure. So yes it does feel like my pension has been reduced to maintain the value of his credit.

    Perhaps that’s what I should have always expected, rather than a clean break and no ongoing liability.
    • Tom99
    • By Tom99 10th Jan 19, 6:36 PM
    • 4,902 Posts
    • 3,430 Thanks
    Tom99
    Good call. It is the civil service pension scheme. Both my husband and I were members of the scheme at the point of the pension sharing order (which is how it’s described in the letter I received from the pension scheme in 2009). The letter said that 30% of my benefits as at the effective date in August 2009 be transferred to him and ‘used to provide him with benefits of equivalent value’.
    The letter I received recently regarding my deferred benefits doesn’t refer directly to my ex husband’s benefits or pension details. It does show for the first time though the direct impact of the scheme revaluing the original PSO figure. So yes it does feel like my pension has been reduced to maintain the value of his credit.
    Perhaps that’s what I should have always expected, rather than a clean break and no ongoing liability.
    Originally posted by Susibee
    A pension sharing order is a clean break on the date the pension co implement the court order.
    Are you sure its not just the way its been presented to you?
    Just as an example, say you pension was worth 100 and the sharing order was 30% so 30.
    On day 1 you have 70 your ex 30, total 100
    Say 5 yrs on there has been a 50% increase so
    You have 105 your ex 45, total 150
    If you are still being told how much your ex's 30 is now worth it might seem as if its increasing at your expense but its not as you have received the 50% increase but only on the 70 you retained.
    • Susibee
    • By Susibee 10th Jan 19, 6:46 PM
    • 5 Posts
    • 3 Thanks
    Susibee
    Thank you for explaining in those simple terms, It is definitely confusing how they are presenting it to me. If they had not shown the revalued figure after all these years I would not have been any the wiser, nor would I have been so surprised to see it set out in that way.

    Thanks all for your input. I really appreciate it.
    • RichEE
    • By RichEE 13th Jun 19, 5:47 PM
    • 1 Posts
    • 0 Thanks
    RichEE
    I've contributed to a final salary scheme with a 33.33% PSO from 2004. My ex transferred out of the scheme that year. I'm now in payment 2019 and I can confirm that my pension has been reduced by the full 33.33%. So it's not been a clean break for me.

    My understanding is that the original white paper on PSO was ambiguous on how pension companies apply the ruling. So really worth checking the pension provider although i can guarantee they wont want to tell you.

    My experience of Tom99s Example

    Given 100 with PSO 33.33%
    My ex Transfer Value 33.33 at year of divorce

    Given hard work and promotions a 50% increase
    Total value 150
    My Value 100 (66.66% of the total)
    My Ex Transfer value 33.33
    The remainder 16.66 apparently is absorbed for the benefit of scheme.
    • Tom99
    • By Tom99 13th Jun 19, 6:09 PM
    • 4,902 Posts
    • 3,430 Thanks
    Tom99
    I've contributed to a final salary scheme with a 33.33% PSO from 2004. My ex transferred out of the scheme that year. I'm now in payment 2019 and I can confirm that my pension has been reduced by the full 33.33%. So it's not been a clean break for me.
    My understanding is that the original white paper on PSO was ambiguous on how pension companies apply the ruling. So really worth checking the pension provider although i can guarantee they wont want to tell you.
    My experience of Tom99s Example
    Given 100 with PSO 33.33%
    My ex Transfer Value 33.33 at year of divorce
    Given hard work and promotions a 50% increase
    Total value 150
    My Value 100 (66.66% of the total)
    My Ex Transfer value 33.33
    The remainder 16.66 apparently is absorbed for the benefit of scheme.
    Originally posted by RichEE
    Since its a final salary scheme in 2004 then the PSO was implemented they years you had then earn would be reduced by 33.33%, so if you had 9 full years service in 2004 that would be reduced to 6 yrs full service.
    The years you have worked since the PSO would add a full yr so if you had worked until 2014 you would have 6+10=16yrs service.
    • bowlhead99
    • By bowlhead99 13th Jun 19, 6:12 PM
    • 9,343 Posts
    • 16,999 Thanks
    bowlhead99
    I've contributed to a final salary scheme with a 33.33% PSO from 2004. My ex transferred out of the scheme that year. I'm now in payment 2019 and I can confirm that my pension has been reduced by the full 33.33%. So it's not been a clean break for me.

    My understanding is that the original white paper on PSO was ambiguous on how pension companies apply the ruling. So really worth checking the pension provider although i can guarantee they wont want to tell you.

    My experience of Tom99s Example

    Given 100 with PSO 33.33%
    My ex Transfer Value 33.33 at year of divorce

    Given hard work and promotions a 50% increase
    Total value 150
    My Value 100 (66.66% of the total)
    My Ex Transfer value 33.33
    The remainder 16.66 apparently is absorbed for the benefit of scheme.
    Originally posted by RichEE
    The way you are describing it, you had built up an entitlement of 100 and gave a third of it away - so ex would get 33.33 of the 100 and what you have built up to that point was only going to entitle you to 66.67 right? Because your service to that point was partially 'given away' ; a third of the qualifying years would go to your ex and not your own pot.

    Then given your hard work and promotions you increased that remaining entitlement of 66.67 by 50%, so you get 1.5 x 66.67 which is 100 at retirement. Meanwhile the ex did not do any more work or gain promotions so they just ended up with the 33.33 that had been agreed way back when.

    If that's unfair, what am I missing... Did you expect your hard work and promotions to increase your pot to 116.67, i.e. by 75% from the level of 66.67 which you had kept for yourself at the time of the sharing order?
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