by David Hodson OBE

What is the situation? 

A couple on relationship breakdown abroad reach a financial settlement which involves sharing a pension based in England and Wales, sometimes based in the UK.  It may be pursuant to a foreign court order or a binding financial agreement.

What is the attitude of English pension companies?

They will not permit a pension share unless there has been an order of the English court.  They will not share a pension based on a foreign court order or on an agreement

Can England grant a freestanding pension share order?

No.  It has to be pursuant to financial proceedings ancillary to a divorce or, exceptionally, where there has been a foreign divorce.

How do pension sharing arrangements occur after a foreign divorce?

The family courts of England and Wales have power to make a pension sharing order when there has been a divorce abroad.  Technically it should only be when there has been inadequate financial provision on the divorce abroad.  In practice the courts will make pension sharing orders where already made by a family court abroad or in a binding financial agreement abroad.

What is the jurisdiction, the connecting factors, for this law?

This is where historically some problems have arisen.  For the family courts to make these pension sharing orders, there must be a close connection.  Either party must be domiciled or habitually resident here for 12 months.  Additionally there is jurisdiction under EU law based on the residency of either party in this country.

Does this cover all cases?

No.  This is where the problem has often arisen.  A person may have come to England and worked here for a period of years and built up a pension but now have no ongoing connection with England such as domicile or residency.  A person may have lived and worked in England but retired to live abroad or have moved abroad permanently.  There are many situations of international families where there are no ongoing connections with a country even though they may have built up a pension there.  This has been a major problem in the past.  Often the divorce financial settlement has had to be unpicked and a different form of settlement negotiated.  This has increased costs and difficulties.

Is there now an answer?

Yes.  It derives from research undertaken by me into EU law.  There is an exceptional basis of jurisdiction, connectedness, based on forum of necessity.  If no other country could make an order, and of course no other country could make the English pension sharing order on an effective basis, then there is jurisdiction.  It is fundamental that the pension sharing order is required to meet the needs of one of the parties.  This then satisfies the fairly obscure part of EU law being relied on for this basis of jurisdiction.  It enables a pension sharing order to be made even though there is no domicile or residence of either party in this country.

Have these orders been made often?

My firm has now undertaken a number of these pension sharing orders after a foreign pension sharing arrangement.  We work closely with another specialist lawyer so that each party has separate representation.  We now have standard forms, pro forma statement and letters to make the process as efficient and cost-effective as possible.  A number of orders have now been made.

How long does it take?

This depends upon the court involved and some courts in England are faster than others.  The pension company also has to be involved and approve the court papers.  We would hope the order could be made by the court within about three or four months.  The pension providers would then have up to 4 months to implement the order, although in our experience they are often much quicker.  Financial services advice should always be taken about the new pension arrangement being created after the pension share has occurred.  We can recommend appropriate advisors.

Are there any other requirements?

Yes.  In order to come within the particular EU legislation, there has to be particular wording in the final divorce financial order or in the binding financial agreement and we can advise on this aspect before the final settlement or agreement is drafted

Is timing important?

The value of the pension for sharing purposes is taken as at the date the English pension sharing order is made.  Pension values can fluctuate quite significantly over a relatively short period of time and therefore timing can be crucial.  Prompt action after the foreign agreement or order in giving instructions to start the English proceedings is important.

What should happen now?

Contact David Hodson, partner and co-founder of this practice, for more details.  He works with a team specialising in these matters.


David Hodson OBE

The International Family Law Group LLP

© January 2017