Don't confuse a serviceman's "terminal gratuity" and his pension, and the commuted lump sum they may take from the pension.
Servicemen get a payment, about 3x salary, when they leave the forces. This is, basically, a resettlement payment, it is to help them in transition into civilian life. It is not a part of the pension as such.
The pension is a pension (so far so good...) but it has special rules to enable a serviceman/woman to take pension income well before the law allows most people to take their pension. That special rule does NOT on the whole apply to the spouses who may get a
pension share: they are not treated in the same way as their serving spouses.
The new rules referred to may allow a spouse to get their "pension share order pension" earlier than was the case, but taking it early will mean what you get by way of an income from it will be heavily reduced. Think of it this way: getting a pension share puts a notional sum into your pension pot. If you start drawing this 10 years earlier than you would have done, you don't have any more in the pot than before, but it has to be spread over an extra 10 years, so the yearly amounts are much smaller. And don't underestimate how much smaller: because the longer you live the more likely you are to die (if you see what I mean..) conversely taking the pension early means the figures have to take account of you being less likely to die soon, so they effectively hold more back.
The above will have actuaries cringing and rushing to correct me! but the idea is basically right: the earlier you take a pension, the bigger the "penalty" for doing so.
A service person entitled to their pension has an option to forfeit some of their income and take it instead as a lump sum. This is called commuting (changing income entitlement for capital entitlement). This is distinct from the terminal gratuity.
Dayglow- don't know where you got your advice, but its confused...
- you don't necessarily get half (or any other %age), but you are right that you could only get it at your retirement age: the new rules may however change this but see the warning above.
- the final gratuity is not split by the court, in fact it can't be (altho I have seen this overlooked!) It was made immune from being "charged" by law, to protect it from being used for anything other than "resettlement": it can't be used as security for a loan, for example. Equally, it can't be subject to a court order.
- you appear to be confusing the "new rules" with the
pension sharing provisions that have been in force since 2000
Marsa- there is no principle that a pension is shared equally, or that the starting point is based on the proportion of the marriage compared to total time served in the Forces. Both may be so in some cases, but they are not in any way "rules" or even guidelines in law. HOWEVER, in some courts a general practice does build up and it may be that there are places where these rules hold more true than elsewhere. Never lose sight of the fact that altho "the law" is the same across England & Wales (but totally different in Scotland), it is applied by District Judges (generally) in County Courts, and they can establish their own preferred practices.
Penny10p: Similarly, pension and gratuity are different things.
And one further point: if a wife gets half of her husband's pension (i.e. 50% of CEV) her pension will not be the same as his... Statistically women live longer, so their pension payments per annum will be lower. If a wife wants to get the same amount of pension as their serviceman husband, you need an actuary to work out what percentage of the pension the wife needs to get in their pension sharing order to achieve this.
I hope I've got most of this right! If not, someone will no doubt shout at me very soon... Peter may come in to explain some of this stuff better than I can, from the actuarial side.
