Brexit countdown on pensions

The Ministry of Justice says it is considering what changes to the law might be required to allow divorcing couples outside England and Wales to obtain pension sharing orders.

However, Michael Allum and Stuart Clark, partners with International Family Law Group, say they have been pressing the government for many years to change domestic law to fill the gap and they are concerned whether it can now be done in time.

Without that change, couples living and domiciled abroad will no longer be able to obtain a UK pension sharing order and may have to revisit settlements or negotiations to achieve a fair outcome.

The issue arises because, while the English family court has the power to make financial orders - including pension sharing orders - after an overseas divorce, there has to be a sufficient connection through habitual residence or the domicile of one spouse in England for the courts to be able to make the order. 

Allum and Clark say this will present a ‘real difficulty’ for international families who no longer have that connection.  It is currently possible to use a residual power within the EU Maintenance Regulation to make needs-based orders, including pension sharing orders, on an exceptional basis, provided the courts of no other EU Member State have jurisdiction. But that will end when the transition period ends.

‘While we welcome the MoJ's commitment, our firm has been calling for this change in the law throughout the Brexit discussions,' they say. 

‘But time is now short so we strongly encourage any couples and their lawyers presently working out divorce financial arrangements which may involve sharing a UK pension to make sure an order is obtained before the end of the year. If not, they may be forced to revisit settlements which have been reached or are in the process of being negotiated to find alternative ways of achieving a fair distribution of assets without including any pensions administered in England.’

Meanwhile, research shows judges and family practitioners are changing tack in their approach to pensions sharing, following Pensions Advisory Group recommendations last year. Read more here