(This archived guidance relates to HMRC discretionary
practice before the 6th April 2006. For current guidance on
Registered Pension Schemes see the Registered Pension Schemes
Manual)
The procedure a scheme must follow when implementing a pension
sharing on divorce order is mainly governed by Social Security
legislation contained in the Welfare Reform and Pension Act 1999
and related regulations. Basically, once the scheme has received
the required documentation from the court (sharing order or
agreement, divorce order and information sheets), the scheme has
four months in which to either offer membership to the ex-spouse or
arrange to transfer the pension credit benefit to another scheme of
the ex-spouse’s choice. Under the Social Security
legislation, this is known as the “implementation and
discharge of liability” of the pension credit benefit.
The Social Security legislation also gives schemes certain
options when implementing and discharging its liability. For
example, the internal transfer option might be the only option in
the case of certain unfunded public sector schemes. Alternatively,
schemes can only offer an external transfer or offer the choice
between the internal and external transfers. Also, if the ex-
spouse does not co-operate with the scheme during the
implementation process, the scheme can either impose scheme
membership or arrange for the pension credit benefit rights to be
transferred into an insurance policy or annuity contract of the
scheme’s choice. This is known as the “default
option”.
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
