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Pension Sharing in overseas divorces
international divorce, pensions, divorce jurisdiction, family, solicitors, lawyers, exeter, devon

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Exeter Office

Tel: 01392 210700            Email us

St Austell Office

Tel: 01726 74433              Email us

Truro Office

Tel: 01872 265100            Email us

The introduction of pension sharing in 2000 was a very welcome one for matrimonial lawyers.

Prior to that point there was no satisfactory way of transferring pension benefits for a non-pension owning spouse. The best that could often be done was to seek an earmarking or attachment order. Both of these mechanisms needed the pension holder to retire before the ex-spouse could take their benefits. Wherever the pension holder was significantly older than the ex-spouse this led to obvious problems. Another flaw was that the pension benefits died with the pension holder. Both problems cut across the principle of the clean break.

Pension sharing removes these problems by allowing the ex-spouse to quite literally remove pension entitlement from the grasp of the pension holder and use this for him or herself. Neither the death nor the retirement of the pension holder affect the benefits acquired by the ex-spouse. The parties can enjoy a clean break in the true sense.

The problem
Whilst pension sharing is available in divorce proceedings commenced in England & Wales however, it is not something expats commencing their divorce overseas can automatically benefit from. This is true even though the pension against which a pension sharing order might have been made is one based in the UK. No British pension provider is obliged to comply with a request to share a pension made by overseas courts.

We are frequently asked to advise clients faced with this problem, when only after their overseas divorce is commenced and they are back in the UK do they realise that they might have otherwise been entitled to a share of their spouse's lucrative scheme had the divorce started in this country.

The solution
The problem can be overcome through relying on Part III of the Matrimonial and Family Proceedings Act 1984 ("the Act"). This legislation was introduced in response to the increase in economic migration in the 80s and concerns in parliament that some British citizens divorcing overseas were not being treated fairly. The Act potentially offers those individuals a remedy.

If the overseas divorce is concluded then to obtain a pension sharing order it is necessary to take the step of issuing proceedings under the Act. When considering whether a pension sharing order should be made under the Act, the Court will apply a number of important tests. These are necessary to make sure, firstly that the parties have enough of a connection to England & Wales to be able to rely on the Act, but secondly, that the principle of comity is not compromised. Comity describes the mutual courtesy between courts in different countries that their judgments should be respected and not undermined.

If the divorce hasn't yet been concluded overseas and the principle of pension sharing is agreed, there are a number of pre-emptive steps that can be taken in the overseas divorce that will assist the comity tests under MFPA84 in this country:

• Recite in the overseas order that it is the parties' intention to make an application to the English Courts under MFPA84. This can alleviate any concerns the English Court may have that by making a pension sharing order it would in any way be undermining the overseas court.

• Avoid a foreign order for pension sharing. The foreign court may consider it is doing the parties a favour by making a pension sharing order, but it could risk having the reverse effect. The English Courts may consider that since a pension sharing order has, on the face of it, already been made, it no longer has the power to make one. This may be the case even though the foreign pension sharing order in unenforceable.

These most basic but important steps could mean the difference between securing a stable pension income in retirement and being without one.

Andrew Barton is a Resolution Accredited Specialist in complicated financial matters arising from divorce. He regularly advises clients in relation to International aspects of divorce and pensions. Stephens Scown has family solicitors in Exeter, Truro and St Austell. Its family team advises clients on a wide range of family law including matrimonial and partner issues including separation, divorce and family finance.