Pensions on Divorce – Standard Family Order Template
Published: 17/05/2023 16:22
This article relates to the publication of the new pension sharing order (PSO) template at paragraph number 95 in the Standard Family Orders suite.
The new Standard Family Order PSO template
The new clause
- There shall be provision by way of [a] pension sharing order[s] as follows:
- in favour of the [applicant] / [respondent] in respect of [percentage]% of the [respondent’s] / [applicant’s] rights under [his] / [her] pension arrangement[s] [pension name(s)]
- [etc (REPEAT FOR AS MANY PENSION SHARING ORDERS ARE TO BE MADE)]
in accordance with the pension sharing annex[es] attached to this order.
- There be the following consequential directions:
- It being agreed between the parties that in the event that the [applicant] / [respondent] non-member spouse predeceases the [respondent] / [applicant] member spouse after this order has taken effect but before its implementation the [respondent] / [applicant] member spouse shall [in order to prevent a loss of pension rights to the family overall] have the consent of the personal representatives of the [applicant] / [respondent] non-member spouse to apply to appeal out of time against the order under the Matrimonial Causes Act 1973, s 40A or s 40B (there being no requirement to obtain permission to apply to set aside an order under FPR 2010 r.9.9A).
- [Neither party shall apply for [decree absolute] / [the final [divorce] / [dissolution] order] until 28 days after the making of the pension sharing order, but the [applicant] / [respondent] will make such application promptly thereafter.]
- Both parties shall do all that is necessary to implement the pension sharing order[s] promptly, including, but not limited to, the signing and returning of any documents related to the implementation [promptly] / [within  /  days] from a written request by any person properly concerned with the implementation process and paying [promptly] / [within  /  days] from a proper written request for the share of the fee ordered by the court and required by the pension arrangement to effect implementation.
- [The [applicant] / [respondent] shall not intentionally claim, draw down, transfer or otherwise deal with any pension benefits subject to a pension sharing order in this order until the pension share so ordered has been implemented, save in the event of prior written agreement as between the parties].
The old template had some gremlins in it. There was an erroneous ‘vary’ provision which cannot, in fact, take place after a PSO has taken effect (MCA 1973, s 31(2)(g)). It further implied that permission might be required from the deceased’s executors for a set aside application. The permission provision originally related to appeals under MCA 1973, s 40A, for which leave to appeal is first required by the court (FPR 30.3). When the FPR 9.9A set aside provisions were introduced, the then amended draft failed to distinguish between a set aside and an appeal in this respect.
Aside from the gremlins, there have emerged common points of good practice which the new template seeks to formalise.
Delaying the application for a divorce final order
Paragraph 95 b. ii. provides the option formally to provide that neither party shall apply for a final divorce order until 28 days after the making of the order, but that such application shall be made promptly upon the expiration of that time.
Practitioners should be familiar with the fact that by virtue of a combination of MCA 1973, s 24B(2), s 24C(1) and Divorce etc (Pensions) Regulations 2000 (SI 2000/1123), reg 9, a PSO does not ‘take effect’ until the later of 7 days after the end of the appeal period (21 days) or order for final divorce order. At this point the ‘Transfer Day’ is reached and the PSO becomes effective.
The practical effect is that if a final divorce order is obtained prior to Transfer Day, and the transferor were to die in that narrow window of time, there is no effective PSO and by virtue of the final divorce order, any widow’s/widower’s or survivor’s pension has evaporated. As people have a habit of dying at unexpected and inconvenient moments, it has long been conventional good practice to delay the application for the final divorce order until after 28 days.
There may be moments when this conventional approach may exceptionally not apply. One instance may be where there has been an order for a lump sum which is significant and there is a race to ensure that lump sum is effective prior to any bankruptcy proceedings being instigated. These situations are rare.
It was thought helpful to codify the practice of delaying the application of the divorce final order into the Standard Family Order template and, to ensure that affairs are brought to an orderly and timely conclusion, it also provides for the application for final divorce order to be made promptly after the expiration of 28 days.
Keeping everyone to timely and good behaviour
Paragraph 95 b. iii. requires parties to cooperate with the timely implementation of a PSO.
The author receives a steady stream of enquiries each year as to what can be done when one party (often as a last lash of economic and coercive control) refuses to pay their share of the PSO implementation fee. Any steps to enforce compliance are likely to be time and cost disproportionate.
At the other end of the spectrum, some PSO recipients put their paperwork in their top drawer after the case is over, causing havoc years later when the recipient seeks to take their pension and the chickens come home to roost.
The idea behind paragraph 95 b. iii. is to keep everyone to good and timely behaviour. The coercive controller will be wise to resist his (for it usually is the husband) darker impulses as such behaviour will now put him on the wrong side of a court order, whereas before he could act with apparent impunity.
Protecting the pension sharing order
Paragraph 95 b. iv. provides the option to, in effect, injunct the pension holder from intentionally drawing down, transferring or otherwise dealing with the pension subject to a share, pending implementation.
The legal status of a PSO between the date of its making until Transfer Day is something of a black hole1 and this provision, if selected, will provide some cover (and should be served upon the pension arrangement immediately, with the sealed final divorce order to follow).
The word ‘intentionally’ is included for a good reason. Where employees have left service, some public sector pensions will deem that the pension lump sum has been drawn at the pension holder’s normal retirement date (NRD), even if they have not, in fact, claimed their pension. A pension holder may have a PSO made against them and prior to Transfer Day they attain their NRD. By Welfare Reform and Pensions Act 1999, s 29, the pension arrangement must apply the PSO against pension benefits which were within the pension ‘immediately before’ Transfer Day. If the pension holder has reached his or her NRD before Transfer Day, the pension lump sum may not be considered to be a pension benefit (and therefore not form part of the PSO), even though it has not been drawn.
The legal status of the PSO between the date of Transfer Day and the implementation is less of a concern as the pension claimant’s inchoate rights are considered to be ‘in the bag’ at this stage.
It is therefore hoped that the new draft template will exorcise the gremlins, codify good practice and act as something of a bulwark against mischief after the order has been made.
The legal effect of the old template was considered by HHJ Farquhar in Goodyear v Goodyear  EWFC 96. In that case the pension share recipient died unexpectedly after the order had taken effect but prior to its implementation.
The order did not, in fact, contain the standard wording about the recipient’s executors giving permission to apply for permission to appeal, etc. An application for permission to appeal and a set aside application were both made. The application proceeded down the set aside route and was allowed by the judge.
The court held that its power was derived from MFPA 1984, s 31F(6) and FPR 9.9A:
‘ The application is now before the Court and it must be considered on its merits. The fact that the standard order was not used cannot impact upon that decision. It is always recommended to utilise the carefully draft[ed] standard orders but a failure to do so in this instance cannot prove fatal to the application.’
There remains a debate as to which route will be the most appropriate when seeking to challenge a PSO. The learned authors of the Red Book 2022 suggest (para 2.1013) that ‘… the normal method of challenging a pension sharing order will be by way of appeal under MCA 1973, s.40A rather than by an application to set the order aside under FPR 2010, r.9.9A (FPR PD 30A, para 4.1B).’ This was not the route adopted in Goodyear, which proceeded to judgment on the set aside application only.
Of note is the fact that the application for permission to appeal out of time was allowed to ‘lie on the file’ as the fact it had been made acted as an automatic stay on the implementation of the order: Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 (SI 2000/1053), reg 4. This was wrongly noted in Goodyear at  as being an issue related to Divorce etc (Pensions) Regulations 2000, reg 9(2), which has the effect of stopping a PSO ‘taking effect’ if the permission to appal application is lodged prior to Transfer Day. In Goodyear, as the order had taken effect, reg 4 was the relevant provision.2 No such regulation exists as yet for ‘set aside’, it being recommended by the Pension Advisory Group (PAG) at paragraph V.19 of its 2019 Report.
The exact choice between set aside and appeal will no doubt be the subject of further argument in future.