The Reluctant Pension Credit Member

The author gratefully acknowledges the significant contributions made to this article by Rhys Taylor, Paul Cobley, Sarah Hoskinson and Ellie Foster.

AP v TP (Pension Enforcement) [2025] EWFC 190 (B)

The facts of AP v TP present a rather unusual situation. When the decree nisi of divorce was pronounced in November 2020, the applicant husband (H) was aged 68, approaching retirement and not in the best of health and his former wife (W), the respondent, was aged 46. On 6 April 2023, a financial remedy order was made by consent following an FDR which included a pension sharing order in W’s favour, as to 48.94% of one of H’s pensions, that being with Aviva (CE approximately £193,000). Both parties were represented. Nothing at all exceptional in all of this, you might think. Difficulties began to arise, however, when W disengaged and persistently failed to provide the necessary information to Aviva to permit the pension share to be implemented, despite repeated letters, court orders and direct contact from H and his solicitors. Ultimately, the matter came before HHJ Farquhar on 27 March 2025, when H was represented and W was neither present nor represented.

Solutions identified in AP v TP

The court identified three potential solutions for resolving the impasse:

• It was suggested on behalf of H that the pension sharing order should be varied to 0%. This solution was rejected in view of the fact that the power to vary a pension sharing order must be exercised before the order has taken effect and before decree absolute/final divorce order (Matrimonial Causes Act 1973 (MCA 1973), s 31(4A)(a)) and was not, therefore, available on the facts.
• The second solution was that in fact adopted and was to set aside the pension sharing order under the Thwaite jurisdiction (Thwaite v Thwaite [1981] 2 FLR 280) as an order that was still executory. A similar course had been taken in WZ v HZ [2024] EWFC 407 (B). The court balanced the possible unfairness to W of losing out on a substantial benefit as against condoning her behaviour, which was having a detrimental impact upon H’s well-being. The court allowed W one last opportunity to perform her obligations under the pension sharing order within 28 days, failing which the pension sharing order would be set aside.
  The court did not consider whether the Barder test for a set aside application would have been satisfied on the basis that the Thwaite jurisdiction was an alternative approach and not one to be considered on Barder principles (at [36]). HHJ Farquhar had himself adopted the Barder approach to set aside a pension sharing order (under Family Procedure Rules 2010 (SI 2010/2955) (FPR) 9.9A) which had taken effect following the unexpected death of a wife in Goodyear v Goodyear [2022] EWFC 96 (B).
• Lastly, the court considered whether it might be possible to vary the pension sharing order to a pension attachment order so that H might be able to drawdown his pension, but permit W to receive an element of it whilst he continued to receive it. Counsel for H ultimately accepted that this was not an option open to the court as it would have required the clean break order to be set aside.

Other available solutions

The advantage to H of setting aside the pension sharing order would, of course, be that W would not receive her pension credit if her non-compliance continued. Assuming that the court’s objective was to ensure W received the pension credit originally contemplated by the consent order, one is prompted to wonder whether the court’s intervention was in fact required and/or whether other solutions may in fact have been available to meet the particular circumstances.

Default option

One of the prime responsibilities of the family lawyer acting for the person with the benefit of the pension credit is to ensure that the pension sharing order is implemented. This could include recommending an independent financial adviser. However, the person with the benefit of the pension credit may state no preference as to an internal or external transfer, may fail to identify a destination arrangement, may request an internal transfer within a scheme which does not offer this option or behave in a generally uncooperative manner as in AP v TP. The trustees may then determine a default option, either selecting an arrangement for the transfer or, indeed, transferring the pension credit internally, where possible. This is only an option for the trustees, which some will choose not to pursue. The transferee should be given an adequate opportunity to state a choice or, where that choice cannot be met, an alternative choice before the default option is engaged. The position is regulated by Welfare Reform and Pensions Act 1999 (WRPA 1999), s 35(1) and Sch 5 and Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 (SI 2000/1053), regs 7–9.

The potential vehicles into which a pension credit may be transferred are governed according to whether the pension against which the pension sharing order has been made is an occupational pension scheme or a personal pension. In the case of an occupational pension scheme, the choice may be already identified in the scheme rules and will usually be a section 32[[1]] buyout policy, which may be used when a member has left employment and wishes to transfer to a deferred annuity contract rather than another employer’s scheme or a personal pension. The member’s benefits are bought out of a registered pension scheme using its funds by purchasing, from an insurance company, a policy that will provide an annuity at some point in the future – a deferred annuity. Any pension credit transfer is a transfer of pension benefits in this context, be they uncrystallised or crystallised benefits. A section 32 buyout policy (or sometimes simply referred to as a deferred annuity policy) is in effect a one-member scheme and has broadly the same pension tax rules as a personal pension. Where the member’s benefits are not in payment, a tax-free lump sum will be available as with any other registered pension scheme.

In the case of a personal pension, a section 32 buyout is not an option as these are only available to accept a transfer of funds from an occupational pension scheme. Whilst normally, the former spouse will be required to sign a proposal form to set up a personal or stakeholder pension, it is contended that these contractual requirements are overridden by the provisions of WRPA 1999, s 35(1) and Sch 5 and Pension Sharing (Implementation and Discharge of Liability) Regulations 2000 (SI 2000/1053), regs 7–9. Some pension providers believe that it is not possible to set up a personal pension without the consent of the policyholder, and the advice of an experienced independent financial adviser, who understands the complexities of the legislation, may be required to discuss the default option with an identified pension provider. Ultimately, it is possible to make an application to the court for a District Judge to sign a proposal form on behalf of the party with the pension credit under Senior Courts Act 1981, s 39 and, if required where Form P1 has not been completed, for an order directing disclosure of the defaulting party’s National Insurance number from the Department for Work and Pensions.[[2]] However, the involvement of the court in this way should be unnecessary in view of the provisions of the legislation.

What are the duties of the pension provider (if any) in this default situation? There had been some concern that, in transferring the pension credit externally, trustees might be carrying out investment business under the Financial Services and Markets Act 2000 and Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544), art 37. The FSA (now the FCA) has confirmed, however, that this should not be the case. Another concern was that trustees might owe the ex-spouse a fiduciary duty, which they would breach if performing an external transfer without consent. While the administrators of an occupational pension scheme ordinarily owe no duty of care to advise the beneficiary under the scheme, where the administrators did proffer specific advice to the beneficiary, they might nevertheless assume a duty to exercise reasonable care and skill in giving such advice.[[3]]

Draw down

AP v TP at [1] states that H ‘is not able to access his pension without the pension sharing order being implemented’. At [15] is a similar statement to the effect that H ‘would not be able to draw down on his Aviva pension whilst it is subject to a non-executed pension sharing order’. No basis is given for these statements.

It could be that H had given an undertaking not to frustrate the implementation of the pension sharing order or that some form of injunction (e.g. under MCA 1973, s 37(2)(a)) was in place. The order in AP v TP just pre-dates the Standard Family Order 2.1 Financial Remedy Order, paragraph 95, Pension sharing order, which at subparagraph (b)(iv) contains a consequential direction to the effect that ‘the [applicant]/[respondent] shall not intentionally claim, drawdown, 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 between the parties’. In either case, the pension provider would be in contempt of court if, with knowledge of the terms of the order or undertaking, it allowed the withdrawal of funds or any dealing contrary to the terms of such order or undertaking.

However, it must be borne in mind that it has been subsequently restated by the Court of Appeal in Manolete Partners PLC v White [2024] EWCA Civ 1418[[4]] that Pensions Act 1995, s 91 prevents a court from making an order[[5]] the effect of which would be that the member would be restrained from receiving their pension under an occupational pension scheme (whether defined benefit or defined contributions), but not a personal pension.[[6]] It has, nonetheless, been persuasively argued[[7]] that Pensions Act 1995, s 91 should not preclude the court from making an order, for example, under MCA 1973, s 37, to preserve pension sharing claims or orders. Whether this argument survives Manolete remains to be seen.

If, despite these arguments, any of these restrictions were in place, it would have been open to H to apply to the court to be released from any undertaking or to have the injunction or the consequential direction discharged in view of the non-cooperation of W.

However, without any such restrictions on drawdown by way of order or undertaking, what would be the position of the pension provider? It is submitted that the pension provider, with notice of a pension sharing order which had taken effect, would not be at risk of contempt in permitting a withdrawal. Nonetheless, it has been argued[[8]] that the pension provider does have a statutory and/or fiduciary duty to the recipient of pension sharing order to ensure that the recipient does indeed receive the funds to which he or she is entitled at or before the end of the implementation period. Breach of such a duty could give rise to a claim by the recipient of the pension credit for an account or breach of trust.[[9]]

If, despite all of this, H were to take a pension commencement lump sum, it may at first sight appear to be no longer open to W to draw such a lump sum from her pension credit with the pension credit operating against a diminished pension fund. It might be open to W to apply under MCA 1973, s 37(2)(b) to seek the return of the pension commencement sum to the pension wrapper, insofar as it has not been dissipated, on a fiscally neutral basis[[10]] or the pension provider could still be required to meet its obligations under the order with a complaint to the Pensions Ombudsman as a subsidiary remedy. W may, however, argue that the pension sharing order remains valid and that the pension provider still has an obligation to discharge its liability under it, including the provision of a lump sum. The payment to H of a pension commencement lump sum despite the existence of the pension sharing order could be regarded as an unauthorised payment.[[11]]

Transfer

Similar considerations would apply to the possibility of H transferring the pension to a completely new arrangement unaffected by the pension sharing order. It may no longer be possible for W to cooperate in implementing the order at a later stage. It might be possible for W to apply under MCA 1973, s 37(2)(b) to set aside the transfer, although she would have to show a lack of good faith and demonstrate notice of intention to defeat a claim for financial relief on the part of the pension provider. The practicalities, however, of returning money to the original pension provider could be frustrated if H has already started to take pension benefits and, for example, is unable to pay back his tax-free lump sum to enable the return transfer to proceed.

MCA 1973, s 40A

Neither AP v TP nor Goodyear make any mention of MCA 1973, s 40A. It would, of course, be a solution requiring recourse to the court. The section is headed ‘Appeals relating to pension sharing orders which have taken effect’. It would seem to be well suited to the factual matrix confronting H in AP v TP and is discussed in detail below.

MCA 1973, s 40A examined in detail

As already indicated, MCA 1973, s 40A provides for appeals against pension sharing orders which have taken effect. Section 40B makes comparable provision in relation to pension sharing compensation orders. A pension sharing order takes effect 7 days after the time for appealing (normally 21 days) has expired, assuming that the conditional divorce order has been made final. It follows therefore that any such appeal will be out of time.

The remedies available to the appeal court will depend upon whether or not the pension arrangement has acted to its detriment in reliance on the taking effect of the order (s 40A(2)–(3)). In determining the issue of detriment, the appeal court may disregard any detriment which in its opinion is insignificant (s 40A(4)). Thus, where the court finds that the pension arrangement has acted to its detriment, the normal powers of the appeal court found in FPR 30.11 are restricted in that the appeal court may not set aside or vary the order. However, in these circumstances, the appeal court is granted an additional power to make such further orders (including one or more pension sharing orders) as it thinks fit for the purpose of putting the parties in the position it considers appropriate (s 40A(5)). This could, for example, include what would be in effect a reverse pension sharing order against the pension created by the pension sharing order which cannot be set aside. Where no detriment is found, perhaps because the pension sharing order has not as yet been sent to the pension arrangement or the pension arrangement has not acted upon it, the appeal court has the full range of appellate powers including a power to set aside or vary the pension sharing order.

FPR PD 30A, para 11 (as amended) now provides that the court’s power to extend or shorten time contained in FPR 4.1(3)(a) (in so far as it applies to the time for filing an appellant’s notice under FPR 30.4) or the court’s power to vary the time for filing an appellant’s notice after time has expired under FPR 30.7 does apply to appeals of the type mentioned, even if the pension (compensation) sharing order has taken effect, and that the court must have particular regard to the matters referred to in ss 40A and 40B.

Only one decision under s 40A is known, that being Sy v Dy [2023] EWFC 280 (B). Here, W died prematurely before two pension sharing orders against H’s NHS pensions had been implemented. The short ex tempore judgment does not make it explicitly clear whether or not the orders had taken effect in that, whilst more than 28 days had elapsed since the date of the orders, it is not clear that there was a final divorce order in place. However, this would appear to be the case, as without it the pension sharing orders would not have taken effect and the discussion ensues as to the relevance of s 40A (incorrectly referred to in the judgment as s 24A at [9]). The pension sharing orders were not made solely on the basis of meeting needs upon retirement as there was also a sharing element. Permission to appeal the pension sharing orders out of time was granted by consent and the pension sharing orders were set aside. In substitution for the pension sharing orders, an order was made for a lump sum payable to the deceased’s estate for the benefit of the parties’ children, which was deferred with security provided by H.

MCA 1973, s 40A and FPR 9.9A compared

An order setting aside a pension sharing order may be required not only in cases of non-compliance, but also in cases of unexpected death. It may therefore be useful to compare and contrast the two remedies.

The remedies at the court’s disposal are regulated by whether or not the pension provider has acted to its detriment, as discussed above. A Barder application will not succeed where it will prejudice the interests of third parties, who have acted in good faith. The extent to which a pension provider has taken steps to implement an order may be relevant to the court’s discretion in considering the set side application.

Conclusion

Perhaps H in AP v TP need not have had recourse to the court in order to resolve the frustrating situation in which he found himself, at the very least by persuading Aviva that they had the power to exercise the default option. Where it is necessary to involve the court, consideration might well be given to the primary remedy provided in the legislation, MCA 1973, s 40A.

The issues raised by this article do point to the need for clarification or reform in relation to certain issues. Primarily, an amendment to primary legislation is required to place beyond doubt that Pensions Act 1995, s 91 should not prevent the court from making an order under MCA 1973, s 37 to protect a pension sharing claim against an occupational pension scheme.

Notes

[[1]]: Finance Act 1981, s 32, subsequently Income and Corporation Taxes Act 1988, s 591(2)(g) and now, post A-Day, classified as a registered pension scheme under Finance Act 2004, Part 4, Chapter 2.

[[2]]: AFW v RFH [2023] EWFC 119 (B), [4](iv) and [95]–[108].

[[3]]: Wirral Borough Council v Evans (2001) 3 LGLR 30.

[[4]]: The decision does nothing other than restate the conventional view of Pensions Act 1995, s 91 found, for example, in Fisher v Harrison [2003] EWCA Civ 1047 (not cited in Manolete) following the approach adopted in Blight v Brewster [2012] EWHC 165 (Ch), which concerned a SIPP rather than an occupational pension scheme, and applied in Bacci v Green [2022] EWCA Civ 1393, which involved an occupational scheme, but where it was conceded at first instance that Pensions Act 1995, s 91 did not present an obstacle, thus preventing the Court of Appeal from granting the relief sought.

[[5]]: Except an attachment of earnings order under the Attachment of Earnings Act 1971 or an income payments order under the Insolvency Act 1986 (Pensions Act 1995, s 91(4)). There is also an exception to be found in relation to pension attachment orders in Pensions Act 1995, s 166(4) and (4A).

[[6]]: Parallel provisions are to be found in Armed Forces Act 2006, s 356 in relation to Armed Forces pensions and in Pension Schemes Act 1993, s 159 in relation to guaranteed minimum pensions.

[[7]]: See Michael Horton, Rhys Taylor and Paul Cobley, ‘Protecting the pension sharing order: Part 2’ [2021] Fam Law 395, where it is pointed out that Welfare Reform and Pensions Act 1999, s 44 disapplies Pensions Act 1995, s 91(2) and corresponding provisions so as not to prevent pension sharing orders being made, arguing that this disapplication could be extended to an order under MCA 1973, s 37 to protect a pension sharing claim or order.

[[8]]: See Michael Horton, Rhys Taylor and Paul Cobley, ‘Protecting the pension sharing order’ [2021] Fam Law 266, and Michael Horton, Rhys Taylor and Paul Cobley, ‘Protecting the pension sharing order: Part 2’ [2021] Fam Law 395. It is argued that such a duty might even arise where the pension sharing order had not taken effect.

[[9]]: Morton v Royal London Group (Scottish Life) (2013) 28 August, PO-378, Deputy Pensions Ombudsman is an example of where a complaint was upheld where the pension provider allowed a former husband to transfer his benefits to another pension plan when it was subject to a pension sharing order.

[[10]]: AC v DC (Financial Remedy: Effect of s 37 Avoidance Order) [2012] EWHC 2032 (Fam), [2013] 2 FLR 1483.

[[11]]: Morton v Royal London Group (Scottish Life) (2013) 28 August, PO-378, Deputy Pensions Ombudsman.

This is an article from the forthcoming Financial Remedies Journal 2026 Issue 1.