Example:
John was an active member of his pension scheme which provided a spouse’s pension equal to two thirds of his pension. At that time John was married to Mary.
John was made redundant and became a preserved member of the pension scheme in 1998. The scheme continued to have a provision for preserved members for a spouse’s pension equal to two thirds of his preserved pension.
However, the Scheme Rules at the time he left service specified that for a preserved member the spouse’s pension would only be paid to the spouse the member was married to at the date of leaving.
So, even though John has left his former employer, Mary continued to be entitled to a two thirds spouse’s pension in the event of John’s death whilst they remained married.
But in 2001, John and Mary divorced and John met and married Susan in 2003.
If John dies before Susan, the pension scheme will only provide Susan with the statutory minimum spouse’s pension – which is significantly less than two thirds of John’s pension. John should investigate any other provision he has for Susan, and consider whether he wants to provide additional cover.
This simple example assumes John’s and Mary’s pensions were considered as part of the divorce settlement but no action was taken to ‘earmark’ or ‘split’ pensions.
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