Case 1
Use of
pensions to enforce lump sum orders
Now that pensions are being treated as an asset much like a
home or a bank account (although there are several material differences in
practice) the question arises whether a pension can be attached as a
conventional asset as part of an attempt to enforce financial orders.
In Field v Field [2003] 12 PBLR (United Kingdom:
England and Wales: High Court: Family Division) 2002 October 28 (Divorce –
Remedies – Sharing – Attachment – Charging orders – Injunctions –
Appointment of receiver – Scheme rules – Anti-alienation rules – Whether
orders may be made by the court over personal pension entitlements where
breach of an order for payment of a lump sum) Mr Field failed to comply
with a court order following his divorce to pay a lump sum to his wife. In
attempting to enforce payment she applied for a series of remedies against
his personal pension, including a charging order, an injunction and the
appointment of a receiver. The husband objected on the grounds
that the court lacked jurisdiction.
It was held
that where there is an anti-alienation clause in the rules of a personal
pension scheme the court has no power to issue a charging order, an
injunction or the appointment of a receiver in order to enforce the payment
of a lump sum earlier ordered by the court.
In the
event the wife’s application was refused on all counts.
Comment The decision emphasises the continuing importance of
anti-alienation clauses in pension scheme rules at a time when it might
have been thought that the new powers of the court under the Pensions Act
1995 and the Welfare Reform and Pensions Act 1999 might have made them
supernumerary. It is true that the courts’ powers in relation to pension
in matrimonial proceedings have been much enhanced in recent years – but
the fact remains that while pensions are now often regarded as an asset
much like many others, and therefore subject to apprehension by the courts
for debt, they remain sui generis.
The reluctance
of the court in this case to find ways round the anti-alienation clause is
a refreshing tribute to the effectiveness of the right of employers and
settlers to draft such terms as they think fit, having regards to the
obligations imposed by the taxation authorities and the requirements of
public policy. The Law Commission’s proposals in 2002 to outlaw for example
exemption clauses for professional trustees in pension scheme rules without
much (any) evidence of abuse of the current position illustrates the ease
by which the authorities assume the need to change the rules of the game.
The courts are much more aware of the need to allow parties to establish
their own parameters unless there are very good grounds to the contrary –
and are also aware, as perhaps the Law Commission is not, of the impact of
the law of unintended consequences.
Forum 
England and Wales 
Scotland 
