When life changes...
Life is rarely straightforward, so it’s important to understand how a change in circumstances may affect your deferred pension.
We’ve included a summary of how certain changes may impact your deferred Magnox benefits below. Select the specific topics to understand a little more about each of them. And please check your member booklet for full details.
It’s also important to check your membership details are up to date if things change. You can check and change some of your details, such as your address, in your myESPS account.
The following changes to your circumstances could have an impact on your deferred pension:
Ill-health
If you need to stop work completely due to ill-health, you may be able to start taking your deferred Magnox pension and cash lump sum straight away, even if you haven’t reached Normal Pension Age (NPA). We call this an ill-health pension.
You won’t be given an ill-health pension automatically. You must meet the criteria outlined in the Scheme rules to qualify. This is:
- having at least 5 years' membership in the Scheme. However, the 5-year qualifying period does not apply if your ill-health is a result of your job. Please check your member booklet to find out more.
- you are under your NPA, and
- medical experts chosen by the Trustee provide evidence that you’re unable to work in your current or other suitable job
If you meet this criteria then you will be granted an ill health pension meaning your deferred benefits will be put into payment before your NPA with no reduction for early payment.
Your ill health pension will be subject to regular monitoring by the Trustee until you reach age 63. You may also be required to attend further medical assessments or submit information about your earnings.
You can find out more about taking your pension early due to ill-health in your member booklet.
Divorce or the dissolution of a civil partnership
If you’re going through a divorce or the dissolution of a civil partnership, your deferred pension is likely to be considered along with your other assets when financial settlements are worked out.
How your pension can be shared out
There are a number of ways for your pension to be dealt with during a divorce or dissolution of a civil partnership. Typically, Courts tend to favour a Pension Sharing Order (PSO).
Pension Sharing Order (PSO)
With this option, a one-off payment that is agreed by both parties and approved by the Court, is made from your pension to your ex-spouse or former civil partner at the time of divorce or ending of a civil partnership. Their share is taken off the total amount of your pension – this is known as a ‘pension debit’. Your ex-spouse receives their share, known as the ‘pension credit’ as soon as the order is finalised. Once the payment has been made, your ex-spouse will have no further claim to your pension.
Pension Sharing provides for a clean break between both parties at the time of divorce or ending of a civil partnership. This is because assets are split immediately and it’s up to both parties to decide what to do with their shares independently.
Other options may include:
Pension offsetting
With Pension Offsetting, you keep your pension assets to yourself in their entirety while something else of the same or similar value, such as property, is awarded to your ex-spouse. If your situation changes in the future and you re-marry or die, your offsetting agreement won’t be affected.
Pension Attachment Order (Earmarking Order)
With this option, when you start getting your pension, a certain amount that is agreed by both parties and approved by the Court, will go to your ex-spouse or former civil partner. The amount could also include a portion of your lump-sum death benefit and/or your retirement lump sum. The payments will be made directly to your ex-spouse or former civil partner when you decide to take your benefits. The State Pension is not included.
The impact of Additional Voluntary Contributions (AVCs)
Any additional payments you’ve made towards your pension while you were an active member of the Magnox Scheme, will be included in the calculations at the time of divorce. They form part of your total benefits in Scheme.
Your State Pension in divorce
Your basic State Pension won’t be shared if your marriage or civil partnership ends.
However, if you have reached State Pension age before 6 April 2016, your ex-spouse could use your National Insurance contributions to increase their basic State Pension.
This is only valid, though, if they don't remarry or enter a civil partnership before they reach their State Pension age.
What is the process and how long does it take?
When considering your pension as part of a divorce or dissolution of a civil partnership, you will usually require details of your pension benefits, including:
- A CETV (Cash Equivalent Transfer Value) for divorce purpose – this takes into account the value of your pension and lump sum (or pension in payment if you have retired), the value of your ex-partner’s dependant pension, and the value of your death after retirement lump sum.
- The amount of lump sum death benefit payable if you died in service
- Details of any dependant’s pension
- Your period of membership
You, or your solicitor, can request this information from the the Scheme administrator, Railpen,
Please bear in mind that there is a charge for a CETV in divorce, and it may take up to 10 working days to process.
You or your legal representative will need to confirm to Railpen once any final decisions have been made and supply any necessary documentation, such as the stamped Pension Sharing Order and Decree Absolute.
Railpen will then send the necessary paperwork to both parties for completion.
Railpen will only begin processing any changes to your pension benefits once all of the paperwork has been returned. We then have up to 4 months to implement the changes and make any necessary payments.
MoneyHelper
You can find additional information and support on managing your finances during a relationship break-up on the MoneyHelper website.
Death
It’s not a happy thought, but it’s important to know what happens to your pension when you die.
Death in deferement
If you die while a deferred member of the Scheme, an immediate spouse's or civil partner’s (or, at the Trustee’s discretion, dependant partner’s) pension will be payable where applicable.
If you have children, they may receive a payment called a children’s allowance.
Your estate will also receive a refund of your contributions, with interest.
If you left the Scheme due to redundancy or reorganisation before reaching age 50 and at the date of your death you had not yet started to receive your benefits, a lump sum will paid out, instead of a refund of contributions.
If you’re married or in a civil partnership, your spouse or civil partner may also receive an immediate pension, and a children’s allowances may be payable too.
More information on what happens to your pension after you die is available in your member booklet.
Death in retirement
If you die within 5 years of retirement, a lump sum will be paid equal to the balance of your pension that would have been payable for the remainder of the 5-year period. This is also known as a 5-year guarantee.
In most circumstances, your spouse or civil partner will receive an immediate pension as well.
More information on what happens to your pension after you die is available in your member booklet.
