Pensions Bill

moved Amendment No. 77: 77: After Clause 18, insert the following new Clause— ““Application for pension sharing order by those resident outside the United Kingdom (1) The Matrimonial and Family Proceedings Act 1984 (c. 42) is amended as follows. (2) In section 15(1)(c) at the end insert ““or any pension arrangement within the meaning of section 19 of the Welfare Reform and Pensions Act 1999 (c. 30)””.”” The noble Baroness said: I shall speak also to Amendments Nos. 78 and 165. We move on to a different subject, connected with the previous one only because it stems in part from the 1994-95 Bill. It covers leftover business not just from then but from the Welfare Reform and Pensions Act 1999, which established pension-sharing on divorce, after many years of campaigning around the entire House led by the much missed Baroness Young and Baroness Seear. Why are these amendments necessary? Essentially, if a British couple retire to Spain and a few years on get divorced, their only assets may be the home and an occupational pension. Part III of the Matrimonial and Family Proceedings Act 1984 allows English courts to make property adjustment orders following a foreign divorce. A wife can still get a fair share of the home even though the divorce between two British citizens is taking place abroad. But sharing those assets would not include sharing the pension, even though it was earned in Britain and provided by a British company. Many EU and other countries cannot legislate to make pension-sharing orders, and even if they do they are invariably not recognisedby UK pension arrangements and so are not implemented. I shall give an example. A couple I was told about moved to France, using their savings and family home to buy a new house there. No further assets apart from the husband’s occupational pension were available. He then left her, they sold the house, shared the proceeds and divorced in France. The French court cannot make a pension-sharing order, and even if it did it would not be honoured by British companies. The wife is in her 60s and finding it hard to get a maintenance order from the French court. She is struggling to survive on casual work as a gardener. I suggest to my noble friend that a simple amendment is needed to put pension-sharing on the same footing as the former matrimonial home, so that the jurisdiction is dependent on where the asset is based not on the residence and domicile of either of the parties. This is a loophole left over from the previous legislation, and I am as guilty about that as anyone, that is for sure. A second issue, unconnected to the foreign jurisdiction point but also left out of the 1999 Act by mistake, is the need to be able to make an order attaching death-in-service benefit, which is a lump sum, and a pension-sharing order in relation to the same pension. It is becoming increasingly common that where the court orders payments of spousal or child maintenance, the recipient, usually the wife, will seek to ensure that the payment is covered should the former husband die in service before it is made. However, insurance policies are an expensive way to deal with this. An attachment order to the death-in-service benefit would achieve the same thing in an inexpensive and straightforward way. We should certainly do something about this as well. Amendment No. 78 covers leftover business from the Pensions Act 2004. We decided, in part because we ran out of time, to exclude pension-sharing provisions from the Pension Protection Fund and the financial assistance scheme. Technically this was done because moneys from the PPF or FAS were compensation or a contribution to loss rather than the original pension. None the less, under the PPF an individual may receive 90 per cent of the original pension, and under FAS 80 per cent. That may represent a significant asset, one as valuable as the matrimonial home. For example, a PPF pension of £20,000 requires a pot of nearly £300,000. That sum would be excluded from any formal divorce pension-sharing arrangements. In other words, if you divorce before your company comes into the PPF, or even if you divorce during the assessment period, pension-sharing would be honoured. If you divorce a month or two later, after the company scheme has come into the PPF, it is not. The spouse’s access to a share of the pension, which may be more valuable than the home, is determined not by the circumstances of the divorce, not by the size of the assets involved, and not by any offsetting that may have taken place, but by the timing of the company’s fortunes. I do not think that that is fair. Virtually all other UK pensions are open to pension-sharing, including the basic state pension by substitution rules and the state second pension. It is unfair that pension pots coming through the PPF and FAS, which may be infinitely more generous than S2P, are excluded. I ask my noble friend whether there is any possibility that in the course of this year or even in next year’s Bill we could bring forward regulations or whatever is necessary to rectify anomalies which, while they may affect only a small number, for those who are so affected are quite serious and were certainly never part of the intention and spirit of the original legislation, which had the support of the entire House. I beg to move.