My ex-wife is chasing me for £20k over a botched pension sharing order (2024)

Ihad a dormant pension with a large pension firm, on which my ex-wife was granted a pension sharing order of just under a third of its value during the last decade.

All paperwork was filed correctly on my side, but it has recently become apparent my ex did not complete the necessary documentation to correctly enforce the order, something I was unaware of.

A few years ago I asked for a settlement figure from the pension firm, paid the required tax and took the lump sum - which I assumed was with my wife's percentage deducted.

I have recently been contacted by my old solicitor who dealt with the messy divorce. He advised me that my ex had been in contact with him and the pension firm, years after the draft order was filed with them, asking for her percentage.

The pension firm has confirmed there was a draft order filed by my solicitor, but not by my ex, and that the money paid to me did not take account of her share.

It has admitted breach of data protection by speaking to my ex without my permission, but says it is not at fault for paying out in full to me. It said it 'has followed its process', leaving me at present being chased for £20,000 that I do not have by my ex.

Any advice will be appreciated.

Tanya Jefferies, of This is Money, replies: You are in a really sticky situation. We asked a senior and very experienced lawyer to explain your options, if your ex-wife pursues this with you.

He also looked at the matter of the pension firm, and whether you or your ex can get it to pay up instead of you.

Should your wife take legal action, it would be wise to get a solicitor in your corner if you haven't already.

If you don't want to use your previous solicitor because you prefer to get fresh eyes on this, you can look for one on the Law Society's website here.

Rhys Taylor is a barrister specialising in matrimonial finance claims who practises from The 36 Group chambers in London. He is also the co-author of Pensions on Divorce: A Practitioner's Guide.

What normally happens when divorcing couples make a pension sharing order?

Provided that a divorce is finalised with a decree absolute, pension sharing orders 'take effect' in law on something called transfer day.

Transfer day is arrived at on the later of decree absolute, or 28 days after the court approved the financial order.

On transfer day, the pension share is effective even though it has yet to be implemented.

It is not a perfect comparison, but think of transfer day as being like the exchange of contracts on a house.

The completion has yet to happen, but a purchaser has some enforceable rights from that day.

In order to implement an effective pension sharing order, the parties must supply the pension trustee with the required documents and, if required by the trustee, pay any stipulated fee.

Once these necessary formalities have been complied with, the pension trustee moves into the 'implementation period'.

This gives it four months to take the 'inchoate rights' - in plain terms, the rights to the pension share that are still in progress towards completion - from the transferor's pension fund and send them to the new destination pension fund.

I am not totally clear from what you have written where you got to in this process. It sounds to me as if you probably got to transfer day, but as your wife did not return whatever was required, the implementation period did not commence.

The legal status of a pension share between transfer day and the start of the implementation period is not totally clear.

As I have already said, your wife has some rights analogous to the way the purchaser of a house with exchanged contracts may have.

What legal action might your ex-wife take now, and where does that leave you?

It may be that your wife will apply back to the family court. She may say that she has not had her pension share.

The court may look at the court order and see whether there are any other claims left open (for example, for periodical payments or for a lump sum) which it could make an order about to require a sum in lieu of her percentage in the pension sharing order.

However, if all other matrimonial claims have been dismissed, the family court's scope for further interference is extremely narrow and legally contentious.

There is a disputed jurisdiction (some judges say this is possible, others not) for the court to vary an 'executory order' - an order which has been made, but for whatever reason has yet to be implemented.

Some might say that if you have another pension fund it would be permissible to 'vary' the executory order to apply to a new pension, but expert actuarial advice may be required as to what percentage may apply to the new fund.

Others would say that this is simply not possible and a judge should not entertain the claim. I am sorry that this is far from clear, but this is the position.

Sometimes an appeal out of time might be allowed and there are special provisions for appealing a pension sharing order in some circ*mstances.

However, from a procedural point of view the time limits for seeking permission to appeal are 21 days from the date of the order, and the court probably would not allow an appeal years out of time unless there was an extremely good reason for the delay.

My guess is that if all other claims have been dismissed in the court order it may be unlikely that anyone can successfully seek to disturb it, unless each side had an agreed way to proceed before the court.

From your point of view, this means you probably would not have to pay your wife the percentage of your retirement fund agreed in the original pension sharing order, at least via this legal route.

You and your former wife are of course free to come to your own agreement. In light of the fact that she has failed to properly implement the order she may be willing to discuss a lower lump sum payment or indeed a payment by instalments.

And if you still have pension assets, if you agreed, it would be possible to make a pension sharing order over another pension fund - but not the fund which was originally subject to the pension sharing order which was not implemented.

You cannot have two pension sharing orders against the same pension in relation to the same marriage.

However, if you do not agree these avenues may be extremely difficult for your ex-wife to pursue.

Can the pension firm be forced to pay your wife her pension share?

You or your ex-wife may also consider a complaint to the Pensions Ombudsman.

Arguably, the pension trustee should not have allowed you to cash out/transfer your pension if it was fully appraised of the pension sharing order which has become effective.

If for some reason transfer day had not been reached - for example, the decree absolute was not granted until after you had drawn down the pension, or the trustee had not been informed it had been reached - then the position may be different.

But if the trustee knew it was the guardian of an effective pension sharing order, the Pensions Ombudsman might consider making an order for the pension fund to compensate your wife for the loss she has suffered.

It would then be a matter between you and your former pension company whether they were able to claw back any of the money which you should not have had.

If you are now a man of straw - meaning you lack the assets to make it worth suing you - that is not going to happen.

However, if you have other assets you would have to consider the terms of your contractual relationship with the pension firm as to whether you are liable to make any repayment.

Your pension firm may simply do nothing if the cost of the dispute would be disproportionate to the sum of money they would hope to recover from you.