Note as well that if either party dies, the order must still be implemented, albeit if the person due the pension credit dies, the pension scheme will distribute death benefits to their beneficiaries rather than make a transfer.
Sending the documents to the pension scheme
The couple will typically receive the court documents two to four weeks after the date of the court hearing.
The pension scheme will need to see copies of the court order (including annex) and the final order of divorce.
They are also likely to need some kind of transfer paperwork indicating where the ex-spouse/civil partner is transferring the pension credit to.
The process cannot start until they have these documents, so encourage your clients to send them to the scheme administrator as soon as possible.
The divorce process can take a while, and clients will have expectations around what amount is expected to leave their pension. The longer the process takes, the more likely it is that the final amount will be different to initial expectations.
If you are advising the credit recipient, it will take time to assess options and make a recommendation. However, if the provider considers they are taking an unreasonable amount of time, the scheme may settle the order internally (provided the scheme rules permit it).
Implementation period
Once the scheme administrator has the court documents and any transfer paperwork, they can begin the implementation period. This is a four-month period in which the pension credit must be transferred.
To calculate the value of the pension credit, the scheme administrator must obtain a new valuation of the pension scheme.
It can choose any day within the implementation period to be the 'valuation day'.
However, scheme administrators will likely have a company stance so as not to be seen to be cherry-picking a date that will suit their customer or disadvantage the ex-spouse/civil partner.
They will then apply the percentage in the annex to the valuation as at the valuation day. The value of the pension credit is then set in stone, and the scheme must give effect to a transfer of that amount.
The point to make here is that the valuation on the valuation day will almost certainly be different to the valuation at the beginning of the process, which could be six to 12 months earlier.
Clients will often have a monetary amount in their head of what they believe they agreed to transfer. A PSO, however, works on a percentage basis, so will often produce a different amount, particularly so the more time has elapsed.
