The Police Pensions (Pension Sharing on Divorce) (Scotland) Amendment Regulations 2001

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend, in relation to police officers in Scotland, the Police Pensions Scheme as set out in the Police Pensions Regulations 1987 (“the 1987 Regulations”). The amendments relate to cases where police officers are divorced, and stem from the pension sharing provisions in the Welfare Reform and Pensions Act 1999 and associated subordinate legislation.

The Regulations have retrospective effect from 1st December 2000 as authorised under section 1(5) of the Police Pensions Act 1976. References in the Regulations to the Secretary of State are to the Secretary of State for Work and Pensions.

Regulation 3 inserts a new Part M (Pension Sharing) into the 1987 Regulations. The new Part has the following effect:–

• Regulation M1 provides that the definition of expressions in Schedule A to the 1987 Regulations apply to Part M. The regulation also provides that the provisions in Parts A to L of the 1987 Regulations are subject to the provisions of Part M.

• Regulation M2 provides for pension sharing in respect of a member’s shareable rights under the 1987 Regulations, but excludes any benefit payable to a widow or widower or other dependant of a deceased member.

• Regulation M3 provides that, when a relevant pension sharing order comes into effect, the police officer’s pension rights under the 1987 Regulations become subject to a “pension debit” and the ex-spouse becomes entitled to a “pension credit”.

• Regulation M4 prescribes how the pension debit is to be calculated, depending on whether the pension sharing order specifies a percentage, or an amount, to be transferred to the ex-spouse.

• Regulation M5 provides for the shareable rights of the police officer to be reduced in accordance with the pension sharing order.

• Regulation M6 provides that, where a pension sharing order has effect, the police officer’s protected rights and guaranteed minimum pension are subject to the pension debit.

• Regulation M7 allows a police authority to discharge its liability in respect of a pension credit by conferring on the ex-spouse “appropriate rights”, which are rights within the 1987 Regulations to the same value as the pension credit.

• Regulation M8 makes provision for the pension credit to be reduced in any case where a police authority makes a payment to a police officer under the 1987 Regulations without knowing that it was subject to a pension debit because of a pension sharing order. In such a case, if the cash equivalent of the police officer’s shareable rights after deduction of the payment is less than the amount of the pension debit, the corresponding pension credit is reduced to the remaining cash equivalent. The effect of this is to restrict, in certain circumstances, the pension credit for which the Scheme is liable.

• Regulation M9 requires a police authority to discharge its liability in respect of a pension credit within a 4 month ‘implementation period'. Basically, this period begins from the date on which the pension sharing order takes effect or, if later, from the date on which all relevant documents (as set out in the regulation) are with the authority.

• In Regulation M10, paragraphs (1), (2) and (4) require a police authority to inform the Occupational Pensions Regulatory Authority (“OPRA”) if the period for implementing a pension sharing order is not met, and also clarify that civil penalties for the breach may be imposed. Paragraph (3) enables OPRA to extend the implementation period in certain circumstances. Paragraphs (5) and (6) refer to cases where an ex-spouse dies before the pension credit liability has been implemented. In such circumstances, provision is made for the police authority to discharge its liability by paying a death grant equal to the annual rate of the pension which would have become payable to the ex-spouse, multiplied by 2.25.

• Regulation M11 sets out the appropriate rights in respect of the pension credit member (the police officer’s ex-spouse). The credit member’s benefits, which will be treated in a similar way to a deferred pension, are basically restricted to a pension at age 60 (part of which can be commuted to a lump sum, in the circumstances described in paragraph (4)), and a lump sum death grant. Benefits will be payable on reaching the normal age for a deferred pension under the Regulations (age 60) and may not be further deferred. Provision is made for the benefits to be increased under the Pensions (Increase) Act 1971. Paragraphs (5) to (9) make detailed provision for the commutation of part of the pension, including notifying the police authority. The lump sum death grant (paragraph 10)) is payable if the pension credit member dies before the age of 60.

• Regulation M12 restricts the amount of additional service which the police officer may purchase in order to replace rights debited. The restricted amount is the amount of service he could have purchased if the pension sharing order had not been made. This restriction is relaxed in respect of moderate earners, i.e. those whose earnings at the date of divorce or annulment do not exceed 25 per cent of the permitted Inland Revenue maximum.

• Regulation M13 allows a police authority to commute under regulation B8 (commutation – small pensions) the pension of a police officer who has been affected by a pension debit. It also allows a police authority to commute a small pension payable to a pension credit number (as long as that pension is still trivial when aggregated with any other pension payable to the person under the 1987 Regulations).

• Regulation M14 prevents a police authority accepting into the Scheme a transfer of a pension credit from another occupational or personal pension scheme, and also prevents it transferring-out a pension credit.

• Regulation M15 allows police authorities to recover, from the parties involved in the divorce, the costs accrued in administering the pension sharing (as set out in the Pensions on Divorce etc. (Charging) Regulations 2000. The police authority has to give notice of its schedule of charges, in advance of the pension sharing order being made.

• Regulation M16 provides that a pension credit cannot be aggregated with other Scheme benefits. It also ensures that, where a pension credit member is also an active member of the Scheme, the pension credit must be disregarded when assessing the length of service in relation to Scheme benefits.

• Regulation M17 provides for the pension credit not to be assigned except where required by law.

• Regulation M18 provides for calculations relating to pension credits and pension debits to be done in accordance with guidance issued by the Government Actuary.

• Regulation M19 specifies which of the 1987 Regulations apply to pension credit members.

Regulation 4, along with the Schedule, makes minor and consequential amendments to the 1987 Regulations and inserts into Schedule A to the 1987 Regulations definitions of expressions relevant to the pension sharing provisions.