Following the Government’s decision that pension sharing will be available in respect of divorce and marriage annulment proceedings that begin on or after 1 December 2000. The Inland Revenue have laid Regulations today to bring into effect the pension sharing provisions contained in the Finance Act 1999.

From the First Appointed Day any retirement benefit scheme seeking tax approval (or continued approval in the case of an approved scheme that is being amended) must include the pension sharing provisions in their rules.

Copies of the regulations will be available shortly from The Stationery Office. They will be available on the Inland Revenue website at


1. The Finance Act 1999 included provisions amending the pensions scheme tax approval rules to enable pension sharing to be introduced. The main changes to the pension scheme tax approval rules are to:
– ease the current restriction on the assignment or surrender of benefits so that pension rights can be shared;
– set out the effect of pension sharing on the maximum benefits a tax approved pension scheme can give to a scheme member; and
– specify the form and timing of benefits that a tax approved pension scheme can give to a former spouse of a scheme member following a pension share.
– These changes to the tax approval pension scheme rules will, in general, come into force at the same time as the Welfare Reform and Pensions Act provisions have effect.

2. The following regulations have now been made to complement the provisions of the 1999 Finance Act.

The Finance Act 1999, Schedule 10, Paragraph 18, (First and Second Appointed Days) Order 2000 1093 (C.32).

This order announces that from the 10th May 2000, the First Appointed Day, the approval or continued approval of a retirement benefit scheme is dependant on the inclusion of the provisions contained in paragraphs 2 and 3(b) of Schedule 10 FA 1999 and that pension sharing will come into force throughout the United Kingdom on the 1 December 2000.

The Retirements Benefits Schemes (Restriction on Discretion to Approve) (Small Self-administered Schemes) (Amendment) Regulations 2000 (SI 2000 No. 1086)

These Regulations make changes to the tax rules for small self-administered pension schemes. These are occupational pension schemes that generally, have less than 12 members. The regulations ensures that the special rules for schemes of this type will still apply when an ex- spouse becomes a scheme member because of a pension share.

The Retirements Benefits Schemes (Restriction on Discretion to Approve) (Additional Voluntary Contributions) (Amendment) Regulations 2000 (SI 2000 No. 1088)

These Regulations will ensure that, subject to an easement offered to scheme members on moderate earnings (defined as someone earning less than 1/4 of the earnings cap, currently 22,950 pounds per annum), a pension share does not affect the calculation of the maximum benefits that a tax approved occupational pension scheme can pay to an ex-spouse who pays additional voluntary contributions.

The Retirements Benefits Schemes (Restriction on Discretion to Approve) (Excepted Provisions) Regulations 2000 (SI 2000 No. 1087)

These Regulations are consequential to the preceding two sets of regulations. They disapply a feature of tax approval legislation that would require existing approved pension schemes to amend their rules within three years if they are not to automatically lose their tax approval status. (For existing tax approved schemes, the FA 1999 included provisions, which overrode the trust deeds and rules, and so this three year time limit is not relevant)

The Retirements Benefits Schemes (Sharing of Pensions on Divorce or Annulment) Regulations 2000 (SI 2000 No. 1085)

These Regulations will in certain circumstances modify the effect of Paragraph 18(5) of Schedule 10 FA 1999 which overrides the rules of all retirement benefit schemes approved before the First Appointed Day and which continue to be approved on or after the 1 December 2000. In particular it will allow scheme members on moderate earnings (currently defined as 22,950 pounds per annum) to rebuild some or all of their lost pension rights.


1. Since the 1970s, courts have been able to take account of the value of pension rights in divorce and nullity of marriage settlements so that these can be offset against other assets in financial settlements. Additions in the 1995 Pensions Act to existing earmarking provisions allow courts:
– in England and Wales (and Northern Ireland under a separate order), to require occupational and personal pension schemes to pay maintenance from a member’s pension to their former spouse;
– throughout the United Kingdom to order part or all of a lump sum payable on the death or retirement of a member to be directed to their former spouse.

2. Earmarking has limitations and as yet has been little used. It does not allow a clean break in most cases; title to the pension rights remains with the spouse in whose name the rights have accrued. It also leaves the person receiving the payment at risk of losing the intended retirement income if their former spouse dies or defers retirement.

3. The Government’s Manifesto included a commitment to implement pension sharing. Pension sharing provisions were included in Schedule 10 of the Finance Act 1999, which received Royal Assent on 27 July 1999 and the Welfare Reform and Pensions Act 1999, which received Royal Assent on 11 November 1999.

4. Draft regulations consequent on the provisions of the FA 1999 were set out in consultative documents issued to pension scheme representative bodies and others on 15 December 1999 and 26 January 2000. The Government is grateful to all those who have provided comments on those draft regulations. The regulations that have now been made take account of comments received to the consultative process.

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