Pensions Bill

I am grateful to my noble friend for raising the important issue of the part the Government play in enabling fair and equitable settlements on divorce. Indeed, she was the Minister responsible for introducing in this House the relevant provisions in the Welfare Reform and Pensions Act 1999. I am disappointed that the Chamber is slightly less full than it was earlier because I thought this would be a good moment to pay tribute to my noble friend on her record of campaigning for women’s pension rights. If they were still in their places, I am sure that other noble Lords would join me in that tribute. I shall deal with Amendment No. 78 first. As my noble friend has described, it seeks to introduce new legislation to enable compensation from the Pension Protection Fund or assistance via the financial assistance scheme to be shared upon divorce. Of course, divorce settlements should be fair, which is why the legislation already ensures that the value of Pension Protection Fund compensation is taken into account by the court as an asset. The legislation also provides for situations where a court has already issued a pension-sharing order and enables the Pension Protection Fund to implement such orders notwithstanding that the pension scheme has been drawn into the Pension Protection Fund. Current legislation allows the value of a pension to be shared on divorce; however, once a party to a divorce is already receiving compensation, or assistance instead of a pension, the court has no powers to share any part of that with the other party. I have great sympathy with my noble friend’s amendment and I am very interested in the cases she describes. Although the Government are not aware of anyone losing out currently, we are actively looking at what we can do to ensure that problems do not arise in future. As my noble friend is aware, this involves engaging with the devolved Administrations in Scotland and Northern Ireland to ensure that any measures we take work effectively across the different family law jurisdictions of the United Kingdom. We also need to ensure that such provisions would work as intended and would not add unnecessary costs or burdens to individuals, the Pension Protection Fund or taxpayers. For this reason the Government do not believe that it is appropriate to introduce the relevant provisions into this Bill. Instead, any necessary legislation would form part of a Bill in a future Session when we have had time to consider properly what would be required to enable court orders to be made and implemented. I hope my noble friend will accept my assurances that the Government are aware of the issues she raises and are working across government and with the devolved Administrations to identify fully any legislation that is necessary to ensure fair settlements where financial assistance scheme assistance or Pension Protection Fund compensation is involved. Amendment No. 77 seeks to extend pension-sharing to those who have a pension arrangement within the terms of the Welfare Reform and Pensions Act but who live abroad and are divorced abroad, as my noble friend described. All current jurisdictional requirements require one or both of the parties to have been domiciled or habitually resident in England and Wales at some point during or since the marriage, or to have a matrimonial home here, hence providing a personal connection with England and Wales. We need to understand further why my noble friend considers that being a member of a UK occupational pension scheme is analogous to the condition of having a beneficial interest in a dwelling house. The latter requires the couple to have resided as a married couple in England and Wales at some point, while the former does not. I am advised that if this were the case it would open up our courts to applications for domiciliary relief on divorce abroad from those whose only connection with England and Wales is where their pension is based. However, we are very happy to discuss this issue at a future date, when it would be important to involve not only the DWP but the Ministry for Justice, which has responsibility for matrimonial law. Amendment No. 165 would allow the court to make both a pension-sharing order and an attachment order for a death-in-service lump-sum payment in respect of the same parties to a marriage and the same pension arrangement. As my noble friend knows, since the introduction of pension-sharing, divorcing couples have had to choose between attachment and pension sharing. Those who choose pension-sharing achieve a clean break and will become entitled to an income regardless of the circumstances of the other party. Income from an attachment order is not so secure; hence the issue of insurance raised by my noble friend. The Government’s current interpretation is thatto allow a former spouse to benefit from both a pension-sharing order and an attachment order would cut across the principle of a clean break. It would also add significantly to the complexity of administering the pension on divorce provisions, particularly if either party subsequently remarried and divorced again. By choosing pension-sharing a former spouse acquires an asset in her own right, which provides security of income at normal benefit age. Having made this choice, a former spouse cannot expect to retain the link, having made a clean break with the other spouse, that an attachment order implies. However, we are willing to consider this matter further to see if there is a substantive issue. Again, this needs to be discussed in more detail. Having made my points on Amendment No. 78 in regard to FAS, and taking note that the issues my noble friend has raised are seen as interesting and important, I hope that she will consider withdrawing her amendment.