It is not uncommon for people living outside the UK to have pension arrangements in the UK. If they divorce overseas, and their marriage is dissolved by an overseas court, the question comes up whether there can be a pension sharing order against a UK pension. Most of the people who have asked me this question have retired to France or Spain. What seems like a common sense request, takes you into quite a complex area of law.
The problem people commonly face is that they have agreed to a pension sharing order in principle between themselves, but they have found that their UK based pension scheme is only able to recognise and implement the agreed arrangement where there is a valid “pension sharing order” made in the courts of England and Wales. So if they are going to enjoy the benefits of a pension sharing order over other arrangements they might agree, they will need to apply to the UK courts.
Before you do that, there are two preliminary questions to ask.
The first preliminary question is whether the pension in question is able to be subject to a pension sharing order at all. Notably the basic State Pension cannot be subject to a pension sharing order but most other pensions can.
The second preliminary question is whether the divorce was pronounced in an “overseas country” which means a country or territory outside the British Isles (or ‘British Islands’ as they are called to in the legislation). For these purposes the British Isles means the United Kingdom of Great Britain and Northern Ireland, and the Channel Islands and the Isle of Man. So if the divorce was pronounced in Scotland, Northern Ireland, the Channel Islands or the Isle of Man, the English courts won’t be able to help you and you will have to speak to a local lawyer.
But if you can answer ‘yes’ to both of those questions, there may be scope to apply to the English courts for a pension sharing order under Matrimonial and Family Proceedings Act 1984, which gives the courts of England and Wales jurisdiction to make financial orders following foreign divorces in certain circumstances. The Act enables the court to make other types of financial order as well, but this post focuses on pension sharing orders. Note also that the law changed when the UK left the EU, so the rules were different for any application made on or before 31 December 2020 where the divorce was in an EU state. But if you are reading this post, I assume that that will not apply to you.
The application can be made by consent, but it is quite intricate and there are a couple of hoops to jump through.
There are two options. The first is to show that, either or both of the parties has been habitually resident in England and Wales for a year before the application is made. This is rarely the case where both parties are living in France or Spain, and, naturally, returning to the UK for a year purely for the purpose of getting a pension sharing order seems disproportionate.
The second option is to show that one or both of you is domiciled in England and Wales. For these purposes the terms ‘domiciled’ and ‘habitually resident’ have a technical meanings, which are similar to the way the terms are used in other areas of law, such as tax and immigration law, but not necessarily identical.
The terms are most easily explained by looking back over the past few years. Suppose you are a UK citizen living and working in the UK, in all probability you are domiciled here as well as habitually resident. If you then relocate overseas, you will cease to be habitually resident in the UK, but you only become domiciled overseas at the point when you also intend to remain there permanently. So to a large extent it hinges on your intentions.
If you can demonstrate domicile or a year’s habitual residence you will then need to persuade the court that in all the circumstances of the case it would be appropriate for the order you are seeking to be made by a court in England and Wales. If the application is made by agreement, this is unlikely to be a problem, the existence of a UK pension scheme, and the wish to share it will probably be sufficient. But if you are applying on a contested basis, it can be more difficult. The court will look at what remedies might be available to you to get a fair settlement (with or without pension sharing) in the country in question, and whether those have been pursued. If a foreign court has considered the situation and made a financial order, the English courts are unlikely to allow further applications, even if the English court might have directed a different or more generous settlement in the same circumstances. They are careful to say that it would be quite wrong to suggest that the UK perception of fairness is the only valid perception, and the English/Welsh courts do not see it as their task to mark the homework of foreign courts.
Pension sharing orders are quite a complicated subject on their own, but when you add the foreign element it becomes extremely complicated, and you will definitely need advice from a solicitor who is familiar with the subject to guide you through the maze.
Health Warning :This post is intended as a general guide only – divorce law can be a very complicated subject, and getting it wrong lead to expensive mistakes so it is important to obtain expert advice about your own situation, I can certainly accept no responsibility for any loss you might suffer as a result of relying purely on the information on this website.
John Pratley is an expert divorce lawyer, who has more than 25 years’ experience advising clients purely about divorce and related family law issues, such as the financial consequences of separating and divorcing. After establishing the first niche family law practice in Bristol, and going on to senior management roles in a national firm, John set up Apple Tree Family Law in 2018. Apple Tree Family Law solicitors specialise in advice about divorce and financial issues.
We are based in Bristol and Exeter, but we have clients all over the UK and further afield. We offer, simply, clear and accurate advice about divorce and family law issues, and the very best client service, for a clear and reasonable price.