Divorce And Pension Sharing As An Expat

Pension Sharing Orders (PSO) offer a clean break between both parties when a marriage or civil partnership ends. Whilst the process is reasonably straightforward for UK residents, for expats the procedure can be more complicated.

Unlike a judgement in the UK, foreign court orders are not automatically enforced by the Courts of England and Wales. Whether you are a British expat abroad or a foreign national with UK pensions, understanding the process is vital in ensuring a smooth process.

What Is A Pension Sharing Order (PSO)?

A Pension Sharing Order is a financial settlement used during divorce proceedings to divide pension assets between spouses or civil partners. This order ensures that both parties receive a fair share of the pension benefits accumulated during the marriage or partnership.

What Is A Pension Attachment Order?

A pension attachment order or earmarking order, switches some or all of a member's pension benefits to an ex-spouse, or civil partner, once the withdrawal process begins.

How Does A Pension Sharing Order Work?

The court determines the percentage of the pension pot to be shared, based on factors like the length of the marriage, the needs of both parties and their financial contributions.

The pension benefits are split according to the court order, with the receiving party getting a share of the pension either in a new pension scheme or transferred to an existing one in their name.

Types Of Pensions

Pension Sharing Orders can apply to various types of pension plans, including workplace pensions, personal pensions, and defined benefit pensions.

Implementation And Impact

Once the order is implemented, the pension rights of the receiving party are independent of the original pension holder. The receiving party gains control over their share of the pension.

This order provides a clean break between the parties in terms of pension assets, as opposed to other arrangements like pension attachments or earmarking.

Pensions And Divorce Complications

The main issue non-UK residents have when dealing with a pension sharing order is receiving the correct advice and finding a suitable scheme. UK financial advisers are licensed by the FCA to solely advice clients in the United Kingdom.

Furthermore, standard UK pension schemes are for UK residents only. As such, if you live outside of the UK, you can find yourself unable to receive financial advice and without a new pension scheme to receive your share.

This is further complicated by the fact that pension sharing orders can specify that the transfer of pension benefits must be to another UK pension scheme.

Pension Sharing Order Expat Solution

The solution is to find a regulated, cross-border expat financial advisory firm, and utlise what is known as an International SIPP. An International SIPP is a UK pension for non-Uk residents. It is regulated by the FCA and a recognised pension scheme by HMRC.

As such, it can receive the pension transfer as per the PSO, receive advice, withdraw the money from age 55 (57 from 2028), and mitigate the currency risk of having your pension in GBP and spending in local currency. At the same time retaining the robust regulation and protection of the UK regulators.

First Steps for Divorce And Pension Sharing As An Expat

The first step is to speak to a regulated cross-border pension transfer specialist. All our advisers at The Wealth Genesis hold extensive knowledge in facilitating pension sharing order transfers. We start with a discovery meeting to understand your exact position and objectives.

We work with you every step of the way, ensuring your needs are met both financially and on a personal level. Via our regular reviews, we ensure your pension investments continue to provide for you as your needs change.

Contact us today using the button or diary link below to speak to an expert independent financial adviser.

FAQs

• I have a Pension Sharing Order and a QROPS, do the same rules apply?

  For overseas pensions such as a QROPS, the matter can become more complicated. Whilst it is recognised pension scheme by HMRC, the pension fund can be invested in unregulated assets and complex structured products. The Wealth Genesis has years of experience with offshore pension schemes including QROPS, QNUPS, and life insurance schemes.

• How long does the Pension Sharing Order process take?

  The time taken to complete a pension sharing order depends on the complexities of the case. Officially, upon the court making their order, the pension trustee has up to 4 months to complete the transfer.

• Which court and lawyer handles PSO?

  A pension sharing order falls under family law. As such, it is the UK family courts that grant a PSO, and Divorce lawyers who submit the relevant paperwork on their client's behalf.

• What happens to pensions that are already being paid out?

  Pension sharing orders can be made on pensions that are already paying pension income. The process however is likely to be more complex.

• Is there an impartial free service I can speak to on the matter?

  Yes, you can contact Moneyhelper, the free and impartial UK government service here.