Pensions have a crucial impact on negotiations for financial settlements on divorce. Stock market volatility and the well-publicised underfunding of global pension schemes mean the value of a pension can change rapidly. Overseas pensions can add further complexity. All of this makes assessment of pensions for divorce settlements difficult.

Why Treat Foreign Pensions Differently

Like domestic funds, overseas pensions are often difficult to value accurately, and the attitude and procedures of third parties – pension providers and trustees – need to be taken into account. In addition the approach of courts in other jurisdictions also comes into play. Unlike homes and other overseas assets held by a divorcing couple, it is often not up to the individual to decide how to administer his or her pension.

Thankfully a recent High Court ruling has shed further light on the best way for couples to deal with offshore pensions when they divorce.

The Case Of Goyal v Goyal

Goyal v Goyal is a long-running divorce case. The couple separated in 2011. Since then there have been at least 65 separate decisions on issues ranging from the validity of the divorce to child arrangements and finances.

In the most recent ruling, Mr Justice Mostyn remarked that the case before him “has been going on for too long and so far as I can tell there is virtually no money left.”

The full judgment is available here.

This ruling revolved around an Indian pension fund solely owned by Mr Goyal. His lawyers argued that English Courts did not have the power to make pension sharing orders or pension attachments in respect of a foreign pension.

After considering the background to the relevant legislation Mostyn J found in favour of the husband.

The judge noted that the applicable rules were the result of close collaboration between English government officials, family law professionals and the representatives of the domestic pensions industry. Further, when he looked at the procedure set out for pension splitting it was his clear opinion that in practice the procedure could only work in the context of a domestic pension. As a result the court was powerless to split the foreign pension as the wife had claimed.

What Is The Alternative To Pension Splitting?

But of course the issue of foreign pensions will still arise. What should couples attempting to agree a financial settlement do?

Mostyn J pointed out that he had previously approved a consent order that effectively achieved the desired goal of pension splitting. That order included an agreement, backed by undertakings, to obtain an order in the US to split an American pension. He did not see why this technique could not be used for other overseas pensions.

When agreeing such an order, couples should always be alert to how it will be viewed overseas. It would seem sensible to obtain some kind of confirmation from the foreign pension provider that it wouldn’t frustrate what has been agreed. But in the light of the clear decision against splitting foreign pensions by English courts, the consent order route provides a workable alternative.

In cases like this the advice of an experienced international divorce solicitor is always recommended. Find out how we can help. Call us on + 44 (0)20 7430 8470 or contact us online.

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