The Government has now issued its response to the consultation on the draft Pension Sharing (Pension Credit Benefit) (Amendment) Regulations 2008 (the Regulations) which are set to govern the payment of pension credit benefit (PCB) arising from a pension share on divorce. The Regulations will bring the rules relating to the payment of PCBs into line with the rules that apply generally to other pension benefits.
The Regulations will allow pension credit held in occupational pension schemes to be paid before normal benefit age (ie between 60 and 65) except in restricted circumstances. Once the Regulations come into force, the PCB held in an occupational pension scheme could be paid to the ex-spouse of the member from age 50 (55 from 2010), or earlier where ill health permanently prevents the recipient from following his or her occupation. Divorcees will also be able to take a tax-free lump sum, which is not currently permitted.
These changes will complement the changes which are likely to be brought in under the current Pensions Bill, removing restrictions on divorcees’ benefits. However, the restriction on the commutation of safeguarded rights will continue to apply until the current Pensions Bill comes into force (safeguarded rights are the part of a pension credit which is attributable to the member’s contracted-out benefits). The Government has proposed that the Regulations take effect on 6 April 2009, the same date as the safeguarded rights provisions are due to be revoked under the Pensions Bill.
View the Regulations (83.6KB)(pdf)
View the Response (56KB)(pdf)