Receiving a pension credit
If you are receiving a share of your ex-partner's benefits after a divorce or ending a civil partnership, here's what you need to know about your pension credit.
What is a pension credit?
If the court awards a Pension Sharing Order (PSO) after a divorce or separation, you will receive part of your ex-partner’s pension benefits. This is known as a pension credit, which you hold in your own right and is separate from your ex-partner’s benefits.
What happens after a Pension Sharing Order?
After receiving the necessary documents from your ex-partner, we process your PSO and contact you if we need further information. Once we have everything we need, we set up your pension credit account and write to you to explain your options. Remember, it’s wise to get independent financial advice before you make any decisions.
Please note – when processing a Pension Sharing Order, LPPA charges a fee. The PSO will specify if the member sharing their pension benefits (your ex-partner) covers the full cost or if the cost must be shared between you. We can’t process the PSO until we receive full payment so it’s important to pay your share as soon as possible.
Select your scheme below to see more details.
What are my options?
- You can choose to keep your pension credit within the LGPS.
- You can transfer the cash equivalent of the pension credit to another pension scheme outside the LGPS (as long as you are not within 12 months of your Normal Pension Age)
The rules for pension credit vary depending on when your ex-spouse paid into the scheme. See below for more details.
When will my pension credit be paid?
If the Pension Sharing Order took effect before 1 April 2014, or your ex-partner stopped paying into the scheme before 1 April 2014, your pension credit will be paid to you without reductions at your Normal Pension Age (age 65).
You can choose to take your pension between the ages of 55 to 65, but any benefits you take before Normal Pension Age would be reduced.
Your pension credit will also be adjusted each year in line with inflation.
Lump sum
When your pension credit starts to be paid, you may have the option of swapping some of your annual pension for a tax-free lump sum, depending on when your ex-partner joined the scheme:
- If your ex-partner joined the LGPS before 1 April 2008 and had not received a lump sum on the transfer date, you may receive a tax-free lump sum. Just remember, you won’t be able to swap part of your pension to increase the amount.
- If your ex-partner joined the LGPS after 1 April 2008, you will not receive a lump sum and cannot swap your pension for one.
What happens to my death benefits?
With a pension credit, there are no dependent pensions for partners or children but there is a death grant benefit.
If you die before your pension credit is paid, your loved ones may be eligible to receive a lump sum death grant of three times your annual pension.
If you die within five years of receiving your pension credit (before age 75), your loved ones may be eligible to receive a lump sum death grant. The amount would be equal to five years of pension payments minus any pension credit already paid to you.
Remember, your pension fund ultimately has the power to decide who will receive the death grant but you can still nominate one or more beneficiaries (including charities). Your pension fund would take your wishes into account when making their decision.
For more information, visit the LGPS website or see the LGPS scheme guide.
When will my pension credit be paid?
If your ex-partner paid into the LGPS on or after 1 April 2014 and the Pension Sharing Order took effect after this date, your pension credit will be paid to you without reductions at your Normal Pension Age (NPA), which is the same as your State Pension Age.
You can choose to take your pension at any age from 55 to 75, but any benefits you take before Normal Pension Age would be reduced. Or if you choose take your pension later than Normal Pension Age, your benefits would be increased.
Your pension credit will also be adjusted each year in line with inflation.
Lump sum
When your pension credit starts to be paid, you may have the option of swapping some of your annual pension for a tax-free lump sum. But you wouldn’t be able to do this if your ex-partner:
- was already being paid their pension when the Pension Sharing Order came into effect and
- they took a tax-free lump sum when their pension started to be paid
What happens to my death benefits?
With a pension credit, there are no dependent pensions for partners or children but there is a death grant benefit.
If you die before your pension credit is paid, your loved ones may be eligible to receive a lump sum death grant of five times your annual pension.
If you die after your pension credit is paid (before age 75), your loved ones may be eligible to receive a lump sum death grant. The amount would be equal to five years of pension payments minus any pension credit already paid to you.
Remember, your pension fund ultimately has the power to decide who will receive the death grant but you can still nominate one or more beneficiaries (including charities). Your pension fund would take your wishes into account when making their decision.
For more information, visit the LGPS website or see the LGPS scheme guide.
What are my options?
At retirement, you will receive an annual pension and have the option to swap part of it for a tax-free lump sum – unless your ex-partner has already retired and taken a lump sum before the Pension Sharing Order took effect. Please be aware, you can’t transfer your pension credit to another pension scheme.
When will my pension credit be paid?
This depends on which firefighter pension scheme your benefits were awarded from as the rules can vary. But generally, your pension credit will remain in the scheme and be paid to you at deferred pension age:
- Your pension credit will be paid at age 60.
- If you have already reached that age, they will be paid to you immediately.
- Your pension credit will be paid at age 65.
- If you have already reached that age, they will be paid to you immediately.
- Your pension credit will be paid at State Pension Age.
- If you have already reached that age, they will be paid to you immediately.
From the date the Pension Sharing Order takes effect, your pension credit will be adjusted each year in line with inflation.
What if my ex-spouse paid into more than one scheme?
If your ex-spouse had pension rights in more than one firefighter scheme (eg FPS 1992 and 2015), the Pension Sharing Order is usually applied proportionately to the benefits in each scheme. So, you may get separate pension credits from each scheme.
For more information, visit the LGA website.
What happens to my death benefits?
With a pension credit, there are no survivor pensions for partners or children but there is a death grant. If you die before receiving your pension credit, a lump sum death grant will be paid to your estate. The amount would be equal to 2.25 times your annual pension credit payment.
If you die within five years after taking your pension credit, the amount would be equal to five times your pension minus any pension already paid to you.
For more information, visit the LGA website or see the FPS 2015 scheme guide.
What are my options?
At retirement, you will receive an annual pension and have the option to swap part of it for a tax-free lump sum – unless your ex-partner has already retired and taken a lump sum before the Pension Sharing Order took effect. Please be aware, you can’t transfer your pension credit to another pension scheme.
When will my pension credit be paid?
This depends on which police pension scheme your benefits were awarded from as the rules can vary. But generally, your pension credit will remain in the scheme and be paid to you at deferred pension age:
- Your pension credit will be paid at age 60.
- If you have already reached that age, they will be paid to you immediately.
- Your pension credit will be paid at age 65.
- If you have already reached that age, they will be paid to you immediately.
- Your pension credit will be paid at State Pension Age.
- If you have already reached that age, they will be paid to you immediately.
From the date the Pension Sharing Order takes effect, your pension credit will be adjusted each year in line with inflation.
If you suffer from serious ill health at any age and are told you have less than one year to live, you may be able to take your pension credit earlier than your deferred pension age.
What if my ex-spouse paid into more than one scheme?
If your ex-spouse had pension rights in more than one police scheme (like PPS 1987 and 2015), the Pension Sharing Order is usually applied proportionately to the benefits in each scheme. So, you may get separate pension credits from each scheme.
What happens to my death benefits?
With a pension credit, there are no survivor pensions for partners or children but there is a death grant. If you die before receiving your pension credit, a lump sum death grant will be paid to your estate. The amount varies depending on which scheme your pension credit is awarded from:
The amount would be equal to 2.25 times your annual pension credit payment.
The amount would be equal to three times your annual pension credit payment.
