*** ANNOUNCEMENT: UPDATE ON THE SUSPENSION OF DIVORCE AND TRANSFER FACTORS - INTERIM ARRANGEMENTS ****
Revised pensions on divorce factors have now been received from the Government Actuary Department but some transfer factors remain outstanding. Currently, SPVA is reprogramming the IT systems to take account of the new factors. Once reprogramming is complete, it will be necessary to test the changes to ensure the integrity and accuracy of the relevant calculations. This may take several weeks to implement.
Once testing is complete, SPVA will start to resume processing the casework which has built as a direct consequence of HM Treasury withdrawal of its existing factor guidance on 26th October 2011. When processing resumes, all casework will be processed in strict date order. In the interim period, the factors used in divorce calculations will be made available on the MOD internet and intranet.
SPVA appreciate the patience of those who are awaiting divorce and transfer information during implementation of these changes.
Background
The March 2011 Budget announced a change to the discount rate to be used in determining contributions to public service pension schemes. The actuarial factors which MOD uses to increase or reduce benefits payable under the Armed Forces and Reserve Forces Pension Schemes (AFPS 75, AFPS 05, FTRSPS 97 and RFPS 05) are based on this discount rate. At the time of the budget announcement, it was therefore necessary for MOD to temporarily suspend the use of some of these factors and scheme members of the Armed and Reserve Forces Pension Schemes were informed via 2011DIN 01-205.
Divorce and Transfer factors were not suspended at that time as the Government Actuary’s Department (GAD) were not in a position to review these particular factors until HM Treasury reissued their guidance on the discount rate to be prescribed for calculating Cash Equivalent Transfer Values (CETV). HM Treasury reissued its new guidance on 26 October 2011.
Since HM Treasury has now reissued its guidance, it is necessary for SPVA to temporarily stop processing any applications relating to Divorce (including pension sharing orders) and Transfers received after 25 October 2011.
The inconvenience which this delay will cause is fully recognised and in order to minimise its effect SPVA will provide Indicative CETVs for information purposes only, calculated using the CETV factors which were in force as at 25 October 2011. From past experience SPVA believe that this Indicative forecast will provide some assistance to its customers and their Solicitors / Financial Advisors during this interim period while new factors are awaited from the GAD.
SPVA will send individuals a further updated CETV calculated using the new factors (effective from 26th October 2011) when they are received and the relevant IT systems have been updated. Please note that no charge will be made for this additional CETV.
In cases where a CETV has been issued prior to 26th October 2011 and the divorce has not yet been concluded, individuals should seek advice from their Solicitor / Financial Advisor as to whether a further CETV calculated using the new factors is required.
Further information
Further information about factors can be found in the Joint Service Publication (JSP) 764 Part 4 - see Related Pages.