Legislation that makes changes to the rules for the payment of pension credit benefit arising from a pension share on divorce came into force on 6 April 2009. The Pensions Act 2008 abolishes safeguarded rights and an amendment to the Pension Sharing (Pension Credit Benefit) Regulations 2000 made by the Occupational and Personal and Stakeholder (Miscellaneous Regulations) Regulations 2009 will allow pension schemes to pay pension credit benefit under the same rules as other pension benefits.
When a former spouse's pension credit is derived from a member's contracted out rights, these rights were known as safeguarded rights. Restrictions applied to safeguarded rights so that they had to be placed in a contracted-out pension scheme and could not be paid before age 60 or as certain lump sums. The abolition of safeguarded rights from 6 April 2009 removes these restrictions and now all pension credit rights held in a pension scheme are payable under the same rules.
Changes to regulations will allow occupational pension schemes to pay pension credit benefit before normal benefit age (commonly between 60 and 65) either as pension or a lump sum, subject to the provisions of the Finance Act 2004.
Following the change in legislation to abolish safeguarded rights there is no longer a need to provide NISPI with details of any pension sharing cases. Form CA2202 no longer needs to be completed. It is therefore important for schemes and providers to maintain accurate records of any pension share orders.
