PPF compensation in divorce – MCA 1973 s. 25E
Section 25E MCA 1973 requires court to consider PPF compensation in divorce orders and modifies orders when PPF takes over the scheme.
25E The matters to which the court is to have regard under section 25(2) include— in the case of paragraph (a), any PPF compensation to which a party to the marriage is or is likely to be entitled, and in the case of paragraph (h), any PPF compensation which, by reason of the dissolution or annulment of the marriage, a party to the marriage will lose the chance of acquiring entitlement to, and, accordingly, in relation to PPF compensation, section 25(2)(a) shall have effect as if “in the foreseeable future” were omitted. Subsection (3) applies in relation to an order under section 23 so far as it includes provision made by virtue of section 25B(4) which— imposed requirements on the trustees or managers of an occupational pension scheme for which the Board has assumed responsibility in accordance with Chapter 3 of Part 2 of the Pensions Act 2004 (pension protection) or any provision in force in Northern Ireland corresponding to that Chapter, and was made before the trustees or managers of the scheme received the transfer notice in relation to the scheme. The order is to have effect from the time when the trustees or managers of the scheme receive the transfer notice— as if, except in prescribed descriptions of case— references in the order to the trustees or managers of the scheme were references to the Board, and references in the order to any pension or lump sum to which the party with pension rights is or may become entitled under the scheme were references to any PPF compensation to which that person is or may become entitled in respect of the pension or lump sum, and subject to such other modifications as may be prescribed. Subsection (5) applies to an order under section 23 if— it includes provision made by virtue of section 25B(7) which requires the party with pension rights to exercise his right of commutation under an occupational pension scheme to any extent, and before the requirement is complied with the Board has assumed responsibility for the scheme as mentioned in subsection (2)(a). From the time the trustees or managers of the scheme receive the transfer notice, the order is to have effect with such modifications as may be prescribed. Regulations may modify section 25C as it applies in relation to an occupational pension scheme at any time when there is an assessment period in relation to the scheme. Where the court makes a pension sharing order in respect of a person’s shareable rights under an occupational pension scheme, or an order which includes provision made by virtue of section 25B(4) or (7) in relation to such a scheme, the Board subsequently assuming responsibility for the scheme as mentioned in subsection (2)(a) does not affect— the powers of the court under section 31 to vary or discharge the order or to suspend or revive any provision of it, or on an appeal, the powers of the appeal court to affirm, reinstate, set aside or vary the order. Regulations may make such consequential modifications of any provision of, or made by virtue of, this Part as appear to the Lord Chancellor necessary or expedient to give effect to the provisions of this section. In this section— “ assessment period ” means an assessment period within the meaning of Part 2 of the Pensions Act 2004 (pension protection) (see sections 132 and 159 of that Act) or an equivalent period under any provision in force in Northern Ireland corresponding to that Part; “ the Board ” means the Board of the Pension Protection Fund; “ occupational pension scheme ” has the same meaning as in the Pension Schemes Act 1993; “ prescribed ” means prescribed by regulations; ... “ regulations ” means regulations made by the Lord Chancellor; “shareable rights” are rights in relation to which pension sharing is available under Chapter 1 of Part 4 of the Welfare Reform and Pensions Act 1999 or any provision in force in Northern Ireland corresponding to that Chapter; “ transfer notice ” has the same meaning as in section 160 of the Pensions Act 2004 or any corresponding provision in force in Northern Ireland. Any power to make regulations under this section is exercisable by statutory instrument, which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
This section tells a divorce court that when it decides how to share money or property between spouses, it must also consider any compensation from the Pension Protection Fund (PPF) that a spouse is likely to get because their pension scheme has failed. Normally the court looks at pensions a spouse will get 'in the foreseeable future', but for PPF compensation that requirement is dropped.
If a financial order was made before the PPF took over the pension scheme, the order automatically changes: references to the pension scheme's trustees become references to the Board of the PPF, and references to pensions become references to PPF compensation. This ensures the order can still be enforced even though the pension has been replaced by PPF compensation.
The section also allows the Lord Chancellor to make regulations to modify how other pension provisions work during the PPF assessment period. It does not affect the court's power to later vary or discharge the order.
When it applies
- A spouse's occupational pension scheme enters a PPF assessment period during divorce proceedings; the court must consider the likely PPF compensation instead of the full pension.
- A divorce financial order was made before the pension scheme collapsed; after the PPF takes over, the order automatically changes to refer to PPF compensation.
- A spouse was due to receive a pension lump sum under a commutation order, but the scheme enters PPF; the order is modified by regulations.
- A pension sharing order was made; the PPF subsequently assumes responsibility for the scheme; the court retains power to vary or discharge the order.
What this section does not say
- This section does not set the amount of PPF compensation a spouse will receive – that is determined by the Pension Protection Fund under the Pensions Act 2004.
- It does not apply to state pensions or personal pensions – only to occupational pension schemes as defined in the Pension Schemes Act 1993.
- It does not affect the court's powers to make orders for sale of property under section 24A or pension sharing orders under section 24B.
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This page reproduces the text of MCA 1973 s. 25E in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.