International pension issues on divorce

Many international couples spend time living and working in England and by doing so they contribute to an English pension scheme. Often such couples will then get divorced overseas. The pension pot is usually one of the most significant assets. But treatment of an English pension on divorce is not always straightforward because it is not possible to share an English pension without an order of the English court.

At the very outset it needs to be determined whether the applicant (seeking an interest in the English pension) is able to make the relevant application in England for a pension-sharing order.

It is also helpful if the overseas order sets out the terms of how the pension is to be divided, as well as which party will make the relevant application to the English court, by when, and who is to pay the costs. This means that the application in England can be made by consent, which expedites the process. In England the pension share must refer to a percentage, which may not be the default position abroad (i.e. it could be by reference to a fixed sum).

The application for an English pension-sharing order must be made in accordance with part III of the Matrimonial and Family Proceedings Act 1984 (MFPA), which permits an application to be made for financial relief in England and Wales after a divorce overseas. However, having an English pension does not automatically mean the court has jurisdiction to make a pension-sharing order.

Under section 12(2), the applicant must not have remarried, and under section 15, either of the parties must:

• Be domiciled in England on the date of the application for leave or be so domiciled on the date on which the divorce took effect in the overseas country;

• Be habitually resident in England for the period of one year ending with the date of the application for leave or for the period of one year ending with the date on which the divorce took effect in the overseas country; or

• Have a beneficial interest in a matrimonial home in England at the date of the application for leave.

If a successful part III application is made, the court has the power to make orders for all the financial remedies available on a traditional application under part II for financial relief on divorce.

The part III application must be made using the procedure set out in part 18 of the Family Procedure Rules 2010 (FPR) and it involves an application for leave of the court to make the application (section 13(1) MFPA states leave can only be obtained where there is a substantial ground for the making of an application) and a substantive application for financial relief (section 16 MFPA states that it must be established that it would have been appropriate for such an order to be made by a court in England and Wales, having regard to statutory criteria).

Where the drafting of the overseas order anticipates the application for an English pension-sharing order, the part III application can be made by the consent of both parties. If made by consent, rule 9.26 FPR confirms that the two applications can be made at the same time. The following documents must be filed at court:

• Form 50E (application for permission);

• Form 50F (application for financial relief);

• Two copies of a draft order (both granting permission and ordering the pension share itself), one which must be signed by both parties and their solicitors where applicable;

• The relevant pension annex;

• Applicant’s statement in support (this must explain how the criteria in section 16 MFPA are being met); and

• The court fee.

If the part III application is contested, an application for permission to the court must be made in the first instance.

If a part III application is not possible, there may be alternatives. For example, the pension asset could be offset against other assets, if available, or it may be possible to transfer the English pension to an overseas pension that could then be divided by the relevant overseas process. Local advice should be sought.

These issues also need to be considered in the reverse situation of an English divorce where a spouse has a pension interest overseas. The current position, as concluded by Mostyn J in Goyal v Goyal (No. 3) [2017] EWFC 1, is that the courts of England and Wales do not have the power to make a pension-sharing order in respect of an offshore pension scheme.

The existence of an overseas scheme will, however, be a relevant factor when the court exercises its powers and discretion in making a financial order under the Matrimonial Causes Act 1973. It is important to seek local advice as to how and if the English pension can be shared; that includes evidence as to whether an English pension-sharing order would be recognised overseas.

Charlotte Symes is an associate at Family Law in Partnership

@FLiPltd flip.co.uk