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  • NRI to pay divorced wife from pension annuities: UK Court

    February 20, 2017

    An appellate court in UK orders that a pension-sharing provision does not apply to foreign pensions, but directed a man to pay a monthly maintenance to his former wife from its annuities.

    In the present matter, the squabbling couple is a banker and his former wife. He once earned over £350,000 a year but blew up his fortune on spread-betting and gathered debts of £500,000. In October 2015, a UK family court ordered him to hand over two-thirds of his pension income to his former wife after observing that he had transferred three UK pension funds to an Indian pension provider.

    According to UK law, a pension may be divided between divorcing spouses by means of a sharing order. But the dispute landed in appellate court where the husband contended that provisions under the Matrimonial Causes Act of 1973 did not apply to foreign pensions. The court agreed but ordered him to pay the woman two-thirds of the quarterly income derived from the annuity policy as it arises.

    The woman had sought a pension-sharing order or transfer of the policy amounts to her and the husband wanted the "periodical payment order" of February 2016 to be varied, as he had no real job and earnings.

    The family court felt that the woman should have the entire benefit of the annuity policy, reasoning that because the husband had lost vast sums by gambling, the wife should recover the few scraps left.

    The appeal court, however, let some income remain with the husband.

    In October 2015, the husband had claimed that, he would get a job within four months with an earning of £60,000 per annum. The woman was also expected to get a job by then with earnings of about £19,000 annually.

    The family court had ordered the husband to pay a monthly maintenance of £500 from March 2016. But a year later, he was still not employed. At present, he was earning relatively modest sums by giving Maths and Physics tuitions. But even then, £500 per month is a long way beyond the husband's capacity. Therefore, the maintenance award was changed from £500 to £100 per month from February 1, 2017.

     

    OUR TAKE

    The present decision of the UK court is justified based on the earning capacity of the husband. Further, this order shall have a major impact on the divorce cases between NRI couples in UK and may make it tough for such warring couples to transfer or conceal assets offshore.


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