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Divorce and overseas pensions – what happens?

Pensions are an important and valuable asset and when a marriage ends, the way in which they are shared has long term consequences for each party’s retirement.

For divorces started from 1st December 2000 the court has had the power on divorce to make a pension sharing order – including relating to overseas pensions.

There are some limited excepted public service schemes but pension sharing applies to any pension arrangement including occupational schemes, public schemes (for example, NHS, Armed Services, Teachers and the Civil Service ) personal pensions, annuities or annuities purchased or transferred to give effect to a personal or occupational scheme.

More people than ever have overseas pensions

Increasing numbers of people spend some of their working lives abroad and it is ever more common to deal with divorces which involve couples of different nationalities. The possibility therefore of encountering an overseas pension has increased.

It has been established practice, provided there is evidence that an overseas pension scheme will implement the order, for the court in this country to make an order for the overseas pension to be shared.

In a recent case Goyal v Goyal 2016, Mr Justice Mostyn decided that the court had no power to make a pension sharing order in relation to an overseas pension (in India in this case) and nor could the court make an order requiring the husband to transfer the overseas pension policy to the wife.

The court retains power to make property adjustment orders against foreign property.

Other options to pension sharing

The Judge also made it clear that there are other options to achieve the same result as pension sharing. In this case the pension was in payment and therefore the simplest solutions was to increase spousal maintenance payments to add on for the wife, the maximum income the husband could receive under the pension with an order compelling him to take that maximum payment.

Where there is more than one fund and there are pensions in the UK or there are other assets which could be used to offset the pension claims in full or in part the issue may be avoided completely.

The alternative approaches to sharing a pension overseas may be less attractive than the finality of pension sharing.

An order recording an agreement backed up by undertakings to obtain a foreign order to share a foreign pension is likely to be effective provided the foreign scheme will implement the pension share.

  • This is a technical and complex area of law. Whether pensions are held in the UK or overseas, professional advice should be taken on relationship breakdown. For help and advice please contact our Family Law and Divorce team by phone or by popping into one of our 11 local offices.

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