Pension Abatement on divorce?

[Hueymeister]

SPVA have abated my pension for the ex by 15%, does this mean my tax free lump sum on leaving will be reduced by 15%?

[dragartist]

Having had my pension abated (because I retired early) the pension and lump sum were wound back. Not all of the lump sum was tax free.

I know this was a CS not mil pension so the terms may not be quite the same.

I just wanted to let you mil guys know that there is no such thing as a gold plated CS pension. many of my industry colleagues who I work with today think this.

Sorry to intrude

[Marly Lite]

Huey, what does your divorce settlement say??

[Al R]

Huey, it is complicated.

Your tax free cash at 55 is a terminal benefit based as a percentage of your final salary. If your pension benefits at 55 are reduced by being allocated to someone else, so too, will be your terminal benefits.. in other words, your rights for tax free cash.

Are you '05, leaving 'early'? EDP is considered as compensation for early termination of service though, and not a pension benefit so does not form part of shareable benefits in the event of matters progressing to a pension sharing order. The other party's solicitor should have picked up on that.

[Marly Lite]

Al, if on AFPS 75, is your gratuity (at say, 38) considered part of your pension or is it a separate provision?

[Al R]

Gratuity payments at aged 38 under '75 are probably treated the same as EDP lump sum and EDP income as, technically, they aren't pensions in payment because (unless you're a footballer, ballet dancer, deep sea diver etc) you can't draw pension income until you're 55. So no.. I don't think SPVA will take them into account when preparing a Cash Equiv Transfer Value statement suitable for a divorce negotiation.

A solicitor should undoubtably take gratuity/EDP into account though and use that short term 'loss' to offset the eventual percentage being negotiated for, especially given the shocking actuarial reduction that applies if a former partner wants benefits at 55 and not 65.