A Pension Adjustment Order is a Court order advising the Trustees of a scheme to designate or not designate a portion of a members benefits to another party.

Pension Adjustment Orders

What is a Pension Adjustment Order?

It is Court order advising the Trustees of a scheme to designate or not designate a portion of a members benefits to another party.  A Pension Adjustment Order (PAO) is necessary to note the Court’s instruction regarding the pension assets and split assets where required as Separation Agreements/Terms of Settlement alone are not sufficient to adjust pension assets.

A PAO, if granted by the Court, can compel the trustees of a pension scheme to:

  1. Pay a designated part of the member’s retirement benefit, called the designated benefit, when it becomes payable, to the applicant, or in the case of the prior death of the applicant, the value of the designated benefit to his or her personal representatives; OR
  2. Pay a specified percentage of the member’s contingent benefit, when it becomes payable on the member’s death in service, to the applicant, or for the benefit of a dependant child in the case of divorce or legal separation of a married couple.

It is important to note the following in relation to a PAO:

    1. A PAO must be sought by way of application to the Court. The court has no authority to make such an order unless the applicant applies to the Court for such an order.
    2. Where a PAO is sought by application to the Court, the Court may make an order, i.e. it is not obliged to make such an order as sought, and the terms of any order made are at the discretion of the Court, following overall guidelines set out in legislation, on the factors which the Court must take into account before granting such an order.
    3. A PAO can deal only with pension scheme benefits. This term includes retirement and death in service benefits (called contingent benefits) and is defined in detail.
    4. A separate PAO is required for retirement and contingent benefits.
    5. A PAO cannot be sought by an applicant if the applicant has remarried or entered a registered civil partnership at the time the PAO is sought.

The term pension scheme for the purposes of a PAO does not include:

  1. Social welfare benefits and pensions
  2. Employer sponsored permanent health insurance arrangements
  3. ARFs or AMRFs; however, a property adjustment order can be obtained over an AMRF and ARF.

A member of a pension scheme means ‘any person who, having been admitted to membership of the scheme under its rules, remains entitled to any benefit under the scheme’.

Professional Advice

The PAO process is still a relatively new and unchartered area from an advice perspective but again Wallace Financial  recommends that you seek professional advice in this area should you be effected at some time in your working life.