As if there wasn’t enough to think about in advance of ‘Brexit day’, spouses with English pensions who are divorcing or have recently divorced abroad must take a moment to consider the potential impact of the UK’s exit from the EU on their ability to share such pensions. The transitional provisions are coming to an end on 31 December 2020 and whilst pensions are not the most festive of topics in the run up to Christmas, it is key that anyone who is in this position considers their options carefully before the end of December.
UK based pension companies will not usually implement a pension sharing order or agreement made abroad automatically and generally require an English court order. In most cases, an application can be made under Part III of the Matrimonial and Family Proceedings Act 1984, but this requires the applicant to have a close connection to England or Wales. Ordinarily a person would at least need to be resident in this country to even consider making an application.
This puts international families in a difficult situation. After all, it is very common when people move on to different countries for them to leave their English pensions intact and left until nearer retirement. Helpfully, EU legislators stepped in and using the jurisdiction conferred under the EU Maintenance Regulation, the English courts have until now been able to intervene where no other country could make the relevant order, allowing the English pension to be shared. As most pension providers require an English order, no other court was capable of making such an order and so the Maintenance Regulation has been used to get around the problem that arises on divorce where neither party lives in the UK but an English pension may have been overlooked.
We are now in very uncertain times and the position post-Brexit remains unclear. Anyone who is going through a divorce abroad where an English pension is involved needs to seek advice quickly to ensure that they are not left high and dry if the Maintenance Regulation does not continue in force once the UK leaves the EU.
Failing to act now could potentially mean that a well-crafted settlement or order obtained in a foreign jurisdiction and which contains provision to share an English pension is not properly enforceable. If the pension is one of the bigger assets in the case, this may have a real and very unwelcome effect on the fairness of the division of the assets.
If you have any questions about pensions and divorce, please contact a member of our family team.