Pensions  

Divorcee wins payout after botched pension sharing

Divorcee wins payout after botched pension sharing

The Cabinet Office pension scheme has been ordered to pay redress to a member's ex-partner after it mistakenly allowed the member to draw from his pension before it was spilt between the two.

A divorcee complained to the Pensions Ombudsman after she received a significantly smaller pension than expected after her ex-husband was allowed to withdraw from the scheme retrospectively before the agreed sharing order was implemented.

The claimant’s former husband, Mr N, was a member of the Principal Civil Service Pension Scheme, which is administered by My Civil Service Pensions.

In January 2015 Mr N’s employer notified MyCSP of his plans to retire in June of that year and Mr N was issued with a retirement pack and quoted a cash equivalent transfer value of £111,565 on the basis that he was still an active member.

A court agreed in September 2015 that 58.6 per cent of Mr N’s cash equivalent transfer value was to be transferred to Ms N, his former wife.

But in October, Mr N contacted MyCSP claiming that he had not received payment of his pension or his retirement pack and so it was reissued.

The following month Mr N returned his retirement forms and MyCSP put his retirement benefits into payment with effect from July 2015, despite the completed forms not being submitted until October.

In December 2015, MyCSP notified Ms N and Mr N that the pension sharing order had been implemented and Ms N received £44,220, 58.6 per cent of the value of Mr N’s pension of £75,465 as of September 2015.

Mr N then confirmed to Ms N’s legal advisers that he had taken a lump sum retrospectively, meaning the pension eligible for the sharing order had shrunk in size.

Ms N’s advisers complained to MyCSP on the basis that it had not notified them that Mr N had decided to take these benefits. They argued that Ms N had lost out on a higher pension credit because her former husband had taken a retirement lump sum.

But this complaint was not upheld.

After subsequent complaints Ms N decided to bring her case to the Pensions Ombudsman.

MyCSP argued that Mr N became entitled to his pension before the effective date of the pension sharing order and that he remained a member of the scheme until his retirement had been finalised.

MyCSP also maintained that it had followed its procedures and provided a cash equivalent transfer value based on Mr N’s status at the time and that it was down to the divorcing parties and their legal advisers to ensure that the pension sharing order achieved the desired outcome.

But an adjudicator at the Pensions Ombudsman concluded that MyCSP had acted incorrectly by allowing Mr N to take his retirement benefits before the pension sharing order was implemented.

The adjudicator said: “Until Mr N applied to take his benefit in late October 2015 and provided all the required documentation to enable him to do so, he did not have an actual right to take those benefits.