Legislation has come into force that makes changes to the post-divorce rules for the payment of pension credit benefit arising from a pension share.
The Pensions Act 2008 abolishes safeguarded rights, and an amendment to the Pension Sharing (Pension Credit Benefit) Regulations 2000, made by the Occupational and Personal and Stakeholder (Miscellaneous Regulations) Regulations 2009, will allow schemes to pay credit benefit under the same rules as other pension benefits.
When a former spouse's pension credit was derived from a member's contracted-out rights, these were known as the safeguarded rights.
Restrictions previously applied to such rights so that they had to be placed in a contracted-out pension scheme and could not be paid before age 60, or as certain lump sums.
Their abolition removes these restrictions so that all pension credit rights held in a pension scheme are payable under the same rules.
Changes to regulations will allow occupational pension schemes to pay pension credit benefit before normal benefit age - commonly between 60 and 65 - either as pension or a lump sum, subject to the provisions of the Finance Act 2004.
As a result of this change, it is no longer necessary to provide the National Insurance Services to Pensions Industry (NISPI) with details of any pension sharing cases.
Form CA2202 no longer needs to be completed. It is therefore important for schemes and providers to maintain accurate records of any pension share orders.