56. At Stages 1 and 2 of the process the member or the Court may request a valuation of the member's pension benefits. Where an active or deferred member has an AVC 'pot' (not life assurance) the administering authority should write to the Fund's AVC provider requesting a CETV valuation of the AVC 'pot(s)'. The administering authority should specify the date to which the AVC 'pot(s)' is / are to be valued i.e.:
a) In England and Wales, the date of receipt of the member's / Court's request, or
b) in the case of divorce or nullity proceedings lodged in Scotland, - the date of receipt of the member’s /Court’s request if it is
received 12 months or less after the relevant date2 , or - the relevant date3
if the date of the member’s / Court’s
request is received is 12 months or more after the relevant date and the date by which the valuation is needed in order to comply with the appropriate deadline for providing information to the member / Court (see Boxes 1 and 4 in this Guide).
57. It will be prudent to request a valuation in respect of each investment 'pot' the member has (e.g. with profits, managed fund, building society, lifestyle, index tracker, green fund, etc.)
58. Technically, the Government Actuary is required to specify how an LGPS AVC 'pot' is to be valued. It is believed that, in practice, the actuary to the AVC provider will determine the valuations in accordance with standard actuarial guidelines.
2
The relevant date is the earlier of the date the parties finally ceased to cohabit or the date if service of the summons in the action for divorce. Section 10(7) of the Family Law (Scotland) Act 1985 states that in determining the date on which the parties to the divorce ceased to cohabit “no account shall be taken of any cessation of cohabitation where the parties thereafter resumed cohabitation, except where the parties ceased to cohabit for a continuous period of 90 days or more before resuming cohabitation for a period or periods of less than 90 days in all.” 3 See footnote above
59. There are a number of issues which the AVC provider will presumably need to address i.e.
• how to value a with profits 'pot' for an active member as no terminal bonus has yet accrued;
• in the case of divorce or nullity proceedings lodged in Scotland, how to value an AVC 'pot' using the A x B/C formula (see annex 7).
60. The AVC provider will need to provide the valuation(s) to the administering authority within the period specified by the administering authority . The administering authority must then include the valuation(s) in the information sent at Stages 1 or 2 to the member / Court.
61. If a "Pension Sharing Order" is received which requires the AVC 'pot(s)' to be shared, the administering authority will need to ask the "ex-spouse" where he / she wishes the share of the AVC 'pot(s)' to be invested. It will be necessary to impose a deadline for a decision well within the 4 month "implementation period" and state that if no decision is received, the share of the AVC 'pot(s)' granted by the Court will be invested in a named investment route of the authority's choice.
62. Where the Credited Member is already aged 65 or over, the
administering authority will need to ask the "ex-spouse" which type of annuity he / she wishes the authority to purchase for him / her (e.g. flat rate, single life, no 5 year guarantee, etc). An open market annuity option should be offered. At present, there is no option for the
Credited Member to defer purchasing an annuity beyond age 65. 63. As soon as the administering authority has received all the relevant
documentation and, if appropriate, any up-front Pension Sharing charges have been paid, the authority should send a copy of the "Pension Sharing Order" to the AVC provider. The authority will need to inform the AVC provider of:
a) the "ex-spouse's" decision in respect of investment routes, enclosing a copy of the "ex-spouse's" option form and any other relevant forms required by the AVC provider;
b) the date immediately prior to the date the Court Order takes effect in order that only contributions in respect of the period up to that date are included in the valuation of the ‘pot(s)’ for pension sharing purposes;
c) the date at which the AVC 'pot(s)' is / are to be valued. Under the Local Government Pension Scheme Regulations 1997, this is the first day of the "implementation period" (i.e. the day the Court
Order takes effect or, if later, the date all relevant documents and up-front charges are received). In the case of the Local
Government Pension Scheme (Scotland) Regulations 1998, it is any day chosen by the administering authority within the period of 4 months beginning with the first day of the "implementation period";
d) the deadline date by which the "Pension Sharing Order" must be implemented; and
e) the earlier date by which the administering authority needs to be informed of the split and the valuation amounts i.e. the amount debited from the member's AVC 'pot(s)' and the amount credited to the "ex-spouse's" AVC 'pot(s)'.
64. The AVC provider will apply the "Pension Sharing Order" and act in accordance with the "ex-spouse's" investment option request. The AVC provider will then inform the administering authority that the "Pension Sharing Order" has been applied and confirm the amount debited from the member's AVC 'pot(s)' and the amount credited to the "ex-spouse's" AVC 'pot(s)'.
65. The administering authority will need to write to both the member and the "ex-spouse" within 21 "days" of the AVC provider
implementing the "Pension Sharing Order". The letter should inform them that the "Pension Sharing Order" has been implemented and should confirm the amount of the debit / credit etc i.e. to follow the same process as outlined in Boxes 10 to 14.
66. The administering authority will eventually need to purchase an annuity for the Credited Member at age 65 (assuming the Credited Member has not opted, at least one year before age 65, for a transfer out).
67. Annual Benefit Statements issued by the Fund's AVC provider will, of course, need to reflect the debit taken from the member's AVC 'pot(s)'. An Annual Benefit Statement ought to be provided to the Credited Member to keep him / her informed of the value of his / her 'pot(s)'.
68. Administering authorities should inform their AVC provider that they intend to recover any fines levied by the "Regulatory Authority" or the Courts against the administering authority or the Pension Manager as a result of:
• a failure to provide information in a timely manner to the administering authority in order to allow the authority to meet relevant deadlines in the pension sharing process, or
• a failure of the company to implement a "Pension Sharing Order" copied to them by the administering authority.
69. Administering authorities should also determine what, if any, charges the AVC provider would wish to recover in respect of the pension sharing process so that these can be built into the authority's schedule of charges.