NIM02772 - Class 1 NICs: earnings of employees and office holders: retirement benefits schemes from 6 April 2006: employer-financed retirement benefits schemes: payments from such schemes: authorised member payments: payments under a pension sharing order

Paragraphs 8(b), 10(4)(c) of Part 6 of Schedule 3 to the Social Security(Contributions) Regulations 2001 (as inserted by regulation 8(7) of the Social Security(Contributions) (Amendment No. 2) Regulations 2006)

Section 164(e) Finance Act 2004

Section 28(1) Welfare Reform and Pensions Act 1999

Article 25(1) of the Welfare Reform and Pensions (Northern Ireland) Order 1999 (SI1999/3147 (N.I. 11))

NIM02765 explains that, subject to the satisfaction of other conditions, a payment out of an employer-financed retirement benefits scheme is disregarded in the calculation of earnings if, had the scheme been a registered pension scheme ( see NIM02715), the payment would have been an authorised member payment of the type shown there. One of those types of payment is a payment made under a pension sharing order or provision as set out in the last two legislative provisions above.

In broad terms, those (legislative) provisions activate the “pension sharing mechanism” as a result of:

• a pension sharing order by a court; or
• an agreement between the divorcing couple.