Getting divorced is never easy. Here is some essential information that will help you understand how getting divorced may affect your pension.
If you divorce, a court may decide that some or all of your Fund benefits should be shared with your ex as part of the divorce settlement.
In most cases, the court would make a ‘pension sharing order’ to split your benefits between you and your ex (or, the court could decide to ‘earmark’ a percentage of your benefits to be paid to your ex when you retire or die, but this is less common).
To split your benefits, they would need to be valued, and the court-decided percentage/value would be transferred out of the Fund to an approved pension arrangement chosen by your ex. Your own Fund benefits will reduce accordingly. Please note that the value which is considered by the court when making a pension sharing order is only estimated. If the court orders that a percentage of your benefits is split for your ex, this will be a percentage of the value at the time the order is implemented (i.e., when the funds are transferred to your ex’s pension scheme). That amount may be higher or lower than at the time the court order is made. If the court orders a set amount to be split for your ex (which is possible under Scottish law) the portion of your pension which this amount uses up will vary between the time the court makes the order and the time the order is implemented.
Note: Your ex cannot become a member of the Fund.
Need to talk?
The Member Care Team might be able to help. This team is dedicated to supporting members in difficult and complex situations like these.
A step-by-step guide to managing your Fund benefits in a divorce
Here’s an idea of the typical steps that need to be taken – you can also see what you’d need to provide, and when and how to provide them. All times are approximate.
- Actions for you / your ex
- Actions for us, the administrator
Get in touch with the admin team
- Review your court letters and details on sharing your pension with your ex
- Check your court letters for specific details on what you need to ask for.
We'll send you an information pack
After 5 – 10 working days, we will send you a pack including:
- an information form for your ex to return to us; and
- a transfer value of your ex’s ‘share’ of your Fund benefits.
This transfer value is illustrative only and not guaranteed. If you proceed with a pension sharing order or agreement, we will recalculate the transfer value again at the point of implementation. Therefore the amount may be higher or lower than the value shown in the illustration provided to the court.
Send your court documents
If you receive a pension sharing order/arrangement, please send us (via post):
- Decree Absolute
- Pension Sharing Order; and
- Pension Sharing Annex.
We'll send transfer out request forms to your ex
Your ex should receive these within 5 – 10 working days.
Your ex needs to complete the transfer out request forms
Your ex, with the receiving scheme, needs to complete the transfer out request forms and send them, by post, to us. We cannot implement the pension sharing order until this information is received and, until we do so, you and your ex run the risk of the value of your pension benefits changing.
We'll complete the pension sharing order
Once we receive all the completed forms, we will recalculate the transfer value and complete the pension sharing order.
How long will it take?
The pension sharing order will be completed no longer than 4 months after receiving all forms from your ex as well as the receiving scheme. But it may take longer if the paperwork is not correct and/or in the format required.
If you are being made redundant, there are 3 things you should know about your benefits:
You could pay some of your redundancy payout into the Fund
This might be a tax-efficient way to boost your retirement income, but you’ll need to keep an eye on the government limits on how much you can contribute and save without paying tax.
If you’re age 55 or older, you can take your Fund benefits straight away
Some members may receive their benefits without reduction for early payment. You would need to check your terms of redundancy to know if this applies to you.
It’s always a good idea to get independent financial advice if you are considering either of these options, to check that they are right for you.
If you’ve been off work for a long time (usually five years and six months) because of ill health, or you’re getting long-term disability payments that have run out, you may be able to take your benefits from the Fund early.
Usually, if you take your benefits earlier than your Normal Pension Age, how much you receive every year is reduced, because they will likely be paid for longer. How much you will receive in the case of ill health will depend on your circumstances, and we’d ask you to go to a medical assessment for which we’ll pay. In this way, your pension might not be reduced in the same way as it would be if you were in good health.
Please see your Schedule Factsheet for the details, including how the Trustee and bank assess what you’re entitled to.
The Bank Workers Charity
The Bank Workers Charity provides information, advice and expert support for you and your family’s health and wellbeing. As you have a NatWest pension, you and your partner or dependent children may qualify for their support. Their services are free, confidential and they are independent of the bank. To find out more, visit https://www.bwcharity.org.uk/