The issue of spousal maintenance in retirement arises only when there was a ‘joint lives’ maintenance order made at the time of the original financial settlement. Such orders are increasingly rare in England and Wales. Courts now prefer to structure financial remedy orders in a way that establishes a clean financial break between spouses. However, until the 2015 Court of Appeal case of Wright v Wright joint lives’ orders were still relatively common. In that case the court indicated that spouses should, where possible, seek employment rather than rely on lifelong maintenance from their ex-spouses.
Inevitably many divorced couples with pre 2015 joint lives’ maintenance orders will be approaching retirement in the coming years. Whether these orders can be altered to reflect the payer’s lower income in retirement continues therefore to be very much a live issue for the courts.
As we’ll see, retirement may well be accepted by the courts as a reason to reduce or stop maintenance payments to an ex. But the legal obligation to pay maintenance does not automatically end with retirement. You should seek an agreement to change payments first. If this is not possible an application to vary the payments must be made to the court.
When does maintenance stop?
If your circumstances have changed and you wish to stop paying maintenance, it’s essential to look at the terms of the original order. Is there an end date? If not, there is an ongoing obligation to pay the maintenance until either the spouse in receipt of maintenance remarries or dies. If you unilaterally stop paying maintenance, the strict legal position is that your ex is entitled to bring enforcement proceedings and recover any arrears that have arisen.
When will retirement justify an end to spousal maintenance?
For the purposes of the Matrimonial Causes Act, retirement is normally considered a material change in circumstances that could lead to a joint lives’ maintenance order being varied or reviewed. For the courts to expect an individual to work past retirement age just so they can meet previously ordered maintenance agreements would go against the principle of fairness that shapes all financial remedy decisions.
In any application to vary or end maintenance courts look again at the s25 factors and apply them to the specific circumstances of the case. The factors include the recipient spouse’s
- Income and earning capacity
- Health and age
- Reasonable living expenses
The applicant’s financial circumstances will also be carefully examined. Ultimately if the recipient of maintenance continues to rely on maintenance to meet their essential needs, the court will be reluctant to substantially vary current payments.
What if I take early retirement?
Care should be taken when deciding to retire earlier than planned. Courts will scrutinise such a decision – particularly if retiring early occurs shortly after the financial order. Doubts could be raised over whether the decision to retire was reasonable or an attempt to frustrate the recipient spouse’s entitlement to ongoing maintenance.
Buying out the maintenance obligation
In some cases, retirement presents an opportunity to achieve a clean financial break. Instead of ongoing monthly maintenance, the parties may agree—or the court may order—that maintenance is capitalised into a single lump sum payment. Whether capitalisation is appropriate depends on the available assets and each party’s financial needs. The issue was addressed in the 2022 case of WK v JC
There, a joint lives’ maintenance order was made in 2004. There was no mechanism for adjusting the amount payable in line with inflation or the RPI. In 2022 the wife who indicated she was struggling financially, applied for the maintenance to be raised and for the husband to pay it in a lump sum instead if monthly over a long period of time.
The husband then applied to reduce or discharge completely his maintenance obligations, arguing the wife had sufficient resources to rely on and had no financial need for maintenance. In part he relied on the fact that he had retired and was living off a reduced income.
The judge made a detailed assessment of both side’s income, financial resources and earning capacity. He indicated that the court’s now had a duty to encourage a clean break settlement in a way that it did not necessarily have at the time of the original hearing two decades previously. It was also up to the wife seeking maintenance to establish that her financial needs justified continuing contributions by her ex-husband.
Taking everything into account the wife’s needs were put at £50,000 per annum. The court found she was capable of meeting half of this amount herself from investment income. Notably the court also ascribed a notional £10,000 per annum earning capacity to the wife even though she had not worked for many years. In ordering the husband to pay a one-off lump sum, his ongoing maintenance obligations were finally ended.
Comment
There is no universal rule about whether maintenance should end when someone retires.
Some maintenance orders continue throughout retirement, while others are reduced significantly or brought to an end. Much depends on the financial needs and resources of both parties, the terms of the original order, and whether there has been a substantial change in circumstances. If you think you will find it difficult to meet your maintenance obligations when you retire, consider addressing the issue with your ex well in advance of retirement so that the possibility of a costly court dispute is avoided and an agreement can be reached. Finally, anyone who may be about to negotiate a financial settlement or engage in financial remedy proceedings must reflect carefully on how their financial needs will be met on retirement.