Employee savings schemes: difficulties in obtaining early release in the event of the amicable separation of a couple

Facts

Ms D told me that, following the dissolution of her civil partnership (PACS), on 12 January 2024, she had requested the early release of her Employee Savings Plan (PEE) on the grounds of ‘dissolution of civil partnership’ with custody of at least one child.

She stated that she had attached a number of supporting documents to her request, including confirmation of the dissolution of her civil partnership and a sworn statement that she had sole custody of her two children, signed by herself and her ex-partner.

However, her request for release was refused by her account keeper, institution X, on the grounds that it should have been accompanied by a copy of the court ruling or, failing that, a full copy of the agreement, approved by lawyer’s deed and filed with a notary, stating the children's habitual residence.

However, Ms D stated that she did not wish to go through a lawyer or a family court judge to justify sole custody of her two children, as the arrangements had been made by mutual agreement with her ex-partner.

Under these circumstances, Ms D asked me to intervene in order to obtain the early release of the assets held in her employee savings scheme.

Investigation

I contacted Institution X, which confirmed that it had indeed rejected Ms D's request on the basis of the supporting documents submitted.

The latter emphasised that the sworn statement did not constitute sufficient or admissible proof, and consequently that it had asked Ms D to forward it a copy of the full final ruling, indicating the habitual residence of the child(ren) or, failing that, a full copy of the agreement approved by lawyer’s deed and filed with a notary indicating the habitual residence of the child(ren).

Institution X further told me that it had indicated to Ms D that she could alternatively send it a custody agreement approved by the Family Court Judge (JAF) so that it could approve her request.

It argued that, as an account keeper, it was obliged to apply the rules, and in particular to comply with the Employee Savings Scheme Guide, the purpose of which is to set out the fundamental principles governing incentive schemes, profit-sharing and employee savings schemes, and which equates to an inter-ministerial circular. Institution X indicated that it therefore had to comply with certain official procedures, particularly with regard to what constitutes acceptable supporting documents.

Thus, after careful examination of the file, Institution X confirmed that it unfortunately could not grant Ms D's request.

On receipt of this response, I contacted Institution X again and provided it with my analysis of the situation:

First of all, I recalled that it is indeed true that the release of assets on the grounds of ‘divorce/dissolution of PACS/separation’ is conditional on at least one child having their habitual residence fixed at the home of the beneficiary. As proof thereof, in the case of the dissolution of a PACS, the Employee Savings Scheme Guide specifies that the interested party must produce the following documents in support of their request :

• a birth certificate bearing a margin note amending the civil status of PACS;
• and the ruling stipulating that the habitual residence of at least one child is at the home of the person requesting release or the order of the JAF stipulating the same as regards the child’s residence.

However, Ms D was unable to provide a ruling or JAF order. I further told the account keeper that I had no legal basis on which to criticise it for having refused to release her assets.

However, I found it important to emphasise that the dissolution of a PACS does not, in itself, resolve the matter of children and that its break-up does not necessarily take place in the courts, including its consequences vis-à-vis any children. On this point, I added that while it is recommended that a parental agreement be drawn up in this context to organise custody of the children, the conclusion of such an agreement is by no means mandatory, nor is its submission to the JAF for approval.

I noted that the Employee Savings Scheme Guide fails to take account of the eventuality whereby partners do not have recourse to a judge if they are able to agree on the arrangements for the custody of their children, as was the case in this instance. The amicable nature of this arrangement precludes the parent with sole custody of their children requesting the release of their assets, since they are unable to produce the required supporting document, which is only drawn up following the intervention of a judge.

I reminded Institution X – just as the Employee Savings Scheme Guide itself states – that the supporting documents requested, although they are indeed the most common, are by no means exclusive. Whatever the grounds for release, the Employee Savings Scheme Guide states that the list of documents is only indicative.

Finally, I emphasised that the purpose of the release in question is to enable the parent – who is now separated – to assume the financial and material consequences of the break-up, as they have to support the child or children living in their home. In this case, Ms D had drawn up a sworn statement to the effect that she had sole custody of her two young children.  It therefore seemed to me, in equity, that the sums released would be of great help to her in her specific circumstances following the dissolution of her PACS. 

Recommendation

In the light of these factors, I proposed to the account keeper, given the current state of the law and in equity, that it review its position on this matter, having regard to all the circumstances, and to make an exceptional release of Ms D's assets.

In response, Institution X informed me that it had agreed to implement my proposal and that it had approved the request for early release on the grounds of ‘dissolution of PACS’, in equity, as requested.

Lesson to be learned 

Firstly, it should be recalled that a separation (divorce, dissolution of a PACS, de facto separation) does not in itself constitute grounds to release a PEE[1]. Some retail investors who refer matters to me are unaware of this. The applicant must in fact prove that the habitual residence of at least one of their children has been fixed at their home. Generally, in the specific case of divorce, the divorce ruling or agreement contains provisions on this subject, such that early release does not pose any particular problem.

On the other hand, this dossier highlights the fact that a sworn statement – the only possible document when ex-partners of a PACS or ex-cohabiting partners reach an amicable agreement on the custody arrangements for their children – is not sufficient as regards the supporting documents listed in the Employee Savings Scheme Guide, which was last updated in 2014. In my view, its update, which regrettably continues to be postponed, should take this situation into account.

For the time being, pending changes to the law, as I have already pointed out in an earlier dossier of the month^[2], the Guide recalls that the supporting documents required for each of the grounds for early release are only requested as proof and not for validity: “Evidently, the supporting documents mentioned therein (in the table in the annex) are provided for indicative purposes only, as the Employment Code itself does not contain an exhaustive list of the documents to be produced in support of the request. Those mentioned are the most common documents. In any event, this list is not restrictive, such that the interested parties may produce any other reference document in support of their request that enables them to attest to the situation for which they are requesting a release.”

This month's dossier reminds account keepers that the list of supporting documents in the Employee Savings Scheme Guide is only indicative, and serves as an opportunity to draw their attention to the AMF Ombudsman's approach to this situation.