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Lord Boyd-Carpenter: In the light of the unanimous support from all quarters of the Chamber for my noble friend's amendment I am a little disappointed and surprised that my noble friend the Minister has not already intervened to say that the Government accept it in principle even if they are not going to accept the precise terms of the amendment, and that they will themselves put in a suitable amendment at a later stage

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of the Bill. I have been hoping that my noble friend the Minister would take that line but his silence, if he will allow me to say so, seems to me a trifle ominous.

I put this point to him. This is an opportunity to deal with a real and growingly urgent problem. It can be dealt with under this Bill. If we miss the opportunity created by this Bill, one cannot tell when it will be possible in the future to introduce this amendment or its equivalent. Obviously there will be no more pensions Bills in this Parliament. Who can say whether there will be a pensions Bill early in the next Parliament? That is guesswork. I hope, therefore, that my noble friend the Minister will either accept this amendment or give a clear undertaking that an amendment to deal with this problem, and to deal with it on the lines of this amendment, will be introduced either in this Chamber or in another place, but somewhere before this Bill becomes law. I think he will find that unless the Government are prepared to accept that point of view they may be in quite serious trouble.

Baroness Farrington of Ribbleton: I, too, rise to speak in support of the amendment and to mention a particular example that was brought to my attention as a local councillor. I use this example because, contrary to popular belief, it is now the case that women lose more years from their careers caring for elderly relatives than they do for young children. There may be a short or a slightly longer career break when children are born and then, just when many women are approaching the stage when they are free from that domestic responsibility, they take on the responsibility of elderly relatives.

I remember the case of a constituent who had given up her career to look after the children when they were young and who then went back to work and was obtaining promotion and enjoying her life. Her husband's parents were later taken ill, one after the other. At the end of that time—after the final parent had died—the husband announced he had found someone else. He divorced his wife and she lost her entitlement. That is not an isolated case. It is a difficult set of circumstances that women can face. It is usually, but not always, the woman who is in that position. I urge the Minister to give a positive acceptance to this measure and to assure us that Government will tackle this anomaly and this injustice with the passage of this legislation.

Lord Boardman: I wish to support the amendment by adding one brief example, which I hope underlines the reason it should be accepted. I refer to the case of a man who was a civil servant and who spent much of his time serving abroad. He was married for many years and then he divorced. Shortly afterwards he remarried—that had no connection with the divorce—and shortly after that he died. His second wife became entitled to a full pension which she believed she had no right to have. She did everything she could to disclaim it. However, there is no mechanism by which that pension could be disclaimed. That pension was payable to her. The only way in which she could make good to the first wife what she believed belonged to the first wife was to do as she did and create a series of deeds of covenant to make

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that possible. That was a case—it may be unusual—of a second wife who desperately wanted to see justice done and to ensure that the first wife received the share of the pension she deserved. However, there was no mechanism which enabled that to be done.

Lord Monkswell: In rising to support this amendment I wish to present a slightly different scenario. It is only right that we take note of the tragic cases that have been reported this afternoon and that Parliament should take action to deal with those and ensure that fairness is brought about. However, we also need to recognise that there are changing patterns of employment and changing patterns of partnership. The point I wish to make is that it is not just a case of ensuring fairness to women and to wives who may suffer as a result of divorce. I envisage a situation where men will suffer because of the different employment patterns and the different patterns of life that prevail at the moment and probably will prevail in the future.

I give one example. Obviously an example that is picked from today we hope does not result in divorce, but the financial implications will become clear to the Committee. There may be a young couple both of whom are practising barristers. One decides to go into politics and the other stays at the Bar. The female who stays at the Bar can have an earnings expectation that is three times that of her husband who has gone into politics. After 20 or 30 years they may divorce. Surely it would be right that her higher pension entitlement, or part of it, should go to the husband. This is not just a consideration as regards improving the lot of women that we are debating this afternoon; we need to ensure fairness between the sexes.

4 p.m.

Lord Mackay of Ardbrecknish: Clearly pensions on divorce is a highly emotive and sensitive issue. I listened with some interest to all the points made, especially the point made by the noble Lord, Lord Monkswell. I am not entirely sure that a court would think that a husband going into politics was necessarily a compelling reason for awarding a larger share of a wife's pension. A court may decide that one was fairly daft to go into politics and not stay with the law. In some ways the noble Lord—whether he meant to or not—has revealed how complicated the issue is when one moves away from the serious cases which all of us know about, and which have been the basis of this debate, to situations where each member of a couple has an entitlement to a pension and they make career decisions which ought not to impinge on the other's pension rights but, if one is not careful, might do so.

I have listened to the debate, as I did at Second Reading. The amendments all seek to deal with this issue in slightly different ways. However, they undoubtedly create a scenario which would have pretty far-reaching consequences for courts, for pension schemes and for the parties to divorce. I believe my noble friend Lady Young has pressed for a more general regulation-making power in Amendment No. 192. I notice that the noble and learned Lord, Lord Simon of

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Glaisdale, is not in his place. I suspect that if I were proposing a broad regulation-making power of this nature which is not just a Henry VIII clause, it is just about a Henry VIII Bill, I would be taken to task to some considerable extent for attempting to do so. As the Committee has already expressed considerable concern at the extent of delegated powers within this Bill we would not be wise to give governments and Secretaries of State—no matter how excellent they are—a delegated power of the breadth, nature and scope that Amendment No. 192A would do.

Of course I understand her argument that she would like to have something on the statute book which we could use after the research project, which I shall mention in a minute or two, has been completed. However, I believe that it would be far better to wait until we are in a position to bring forward detailed primary legislation. It is not a question of inserting a clause or two in the Bill; it would require much more work than is suggested in the amendments.

It would be difficult not to have sympathy with those who list examples—both specific and general examples—and say that action is needed now. However, it would be irresponsible of any government, of whatever complexion, to enter into major legislation of this kind before the issues had been fully and properly considered.

The noble Baroness, Lady Hollis, suggested that under her preferred option of valuing pensions on divorce much of the bitterness would be removed. I have a great deal of sympathy for many of the other arguments put forward by the noble Baroness, but that one fell on very stony ground because I do not believe that the bitterness would be removed. Indeed, I can envisage scenarios in which it might be aggravated. I do not pray that in aid as a defence, I say simply that we would be foolish not to recognise that there could be severe problems and considerable bitterness in the scenarios being painted.

I recognise that cases of real hardship may be caused as a result of ignoring pension rights in a divorce settlement, but it is important that we do not overlook the fact that when making financial provisions on divorce the courts are already required to take into account the loss of pension rights as a result of divorce. For every case in which it is claimed that hardship occurs because pension rights have not been included in a divorce settlement there may be other cases in which a perfectly equitable settlement has been reached. The fact is that we simply do not know because nobody has taken the trouble to find out.

That is why we have commissioned detailed research, which I mentioned a few minutes ago. The project will explore the current treatment of occupational pensions on divorce. Through interviews with some 2,500 women (including 500 recent divorcees) the husbands of 400 of those women and a sample of solicitors involved in 900 recent divorce cases, we shall be able to build up a more detailed picture than that provided by the anecdotal evidence which has been cited in various debates and reports on the subject.

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The research will provide extensive information about divorce cases, including the type of pension provision involved, the value of pension assets at divorce, the method of valuation used, the treatment of contingent benefits and the use made in current divorce settlements of alternative methods of accounting for pension rights.

I have been asked by a number of Members of the Committee why matrimonial law in England and Wales is not brought into line with that in Scotland. The difference between the two jurisdictions is very slight. We need to consider what difference exists in practice. That is why we have commissioned a separate study within the research project to look specifically at the position in Scotland where, as one or two Members of the Committee pointed out, the law is different.

Clearly any changes to the Matrimonial Causes Act 1973 are a matter more for my noble and learned friend the Lord Chancellor than for me. But I can assure the Committee that we are looking very carefully at whether that Act could be amended so as to place greater emphasis on the need for pension rights to be taken into account by the courts when considering financial provision on divorce. Consideration will also be given as to whether a power should be taken to prescribe a method of valuing pension rights on divorce. I hope that the Committee will acknowledge the extent to which that shows that the Government are prepared to listen and respond to the representations that have been made.

Both the Pensions Management Institute working group and the Pension Law Review Committee recognised the complexity of this issue. Given that complexity, I believe that we would be criticised—and rightly so—if we were to rush into hastily conceived and ill-informed decisions. We would run the very high risk of getting it wrong and creating new problems and new inequities.

The PMI working group report considered a number of options. Its preferred approach involved the splitting of pension rights between the divorcing parties at the time of divorce on a cash equivalent basis. That was the third solution to the problem suggested by the noble Baroness, Lady Hollis. The problem is not so much the difficulty of establishing the cash equivalent—that is comparatively easy—but how it should be apportioned between the parties after that cash equivalent basis has been established.

Another option was to require pension rights to be earmarked for payment to a divorced wife once her ex-husband retired —a form of deferred maintenance. That was the second option. It is my understanding that the working group was divided on the relative merits of the options and that the final recommendation for the cash equivalent approach was finely balanced.

The fact that the PMI working group itself was so uncertain about the way forward is a telling indication of the potential minefield into which it was treading. The PLRC considered the PMI working group report and recommended that the Government should carry out further detailed work. That is precisely what we are doing.

My noble friend Lady Young and my noble friend Lady Elles went a little further in trying to tempt me into thinking about potential savings. I am not sure

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whether this is the right debate in which to remind my noble friend of the old adage "yield not to temptation", but I shall not yield to the temptation. However, I can tell my noble friends that preliminary analysis shows that the tax revenue losses would be well in excess of any savings on income benefits. Therefore, they ought not to use that argument, although that is not to deny that the other arguments have considerable benefits.

The PMI report was a considered and valuable piece of work which built on previous reports on the subject. But it did not set out the options in the context of a quantitative analysis of the perceived problems. Nor did it consider in any detail the possible implications and costs of the options put forward. That is the detailed work to which we believe the PLRC referred.

For any such analysis to be worth while it needs to be predicated on a clear understanding of the nature and extent of the problems. We expect that the results of the research project will provide an important contribution to that understanding, including a comparison of the position in England and Wales with that in Scotland. When we have had an opportunity to analyse the research findings we shall be very much better placed to consider the case for change and to ensure that the change we make is the right change and does not raise as many problems as it resolves. We ought not to prejudge the issue in this legislation.

I began by saying that this is a sensitive and emotive issue. I hope that I have been able to persuade the Committee that we are by no means unsympathetic to the problems that have been described. At Second Reading I said that I knew of a lady who had found herself in exactly one of the scenarios mentioned by Members of the Committee. But this is not a matter which we can decide merely because we know of some hard cases. We have to be certain that any legislation which we introduce in this very difficult and complex field is right. At the risk of repeating myself, I believe that we could add to the bitterness mentioned by the noble Baroness, Lady Hollis.

We have undertaken the research. Once we have the results of that research we shall honour the undertaking that we have given to look seriously at how we resolve the problem if there is a clear and agreed approach. We have accepted the PLRC's recommendation to undertake further work. As I mentioned in relation to the Scottish provision, we shall see whether we are able to bring something back at Report which might place greater emphasis on the need for pension rights to be taken into account in England and Wales and, importantly, to give the courts a basis on which to value pension rights.

I hope that with that explanation of the position and what we believe we can do in the Bill, my noble friend and other Members of the Committee will feel that, although we may not be going as far as they would like us to go, we are attempting to tackle this very difficult problem in a way which ought to improve the situation in England and Wales and will give the courts a basis on which to value pension rights. That should place the courts in a better position to do what they can already

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do and what many are doing—as in the case of the lady who was mentioned, if her lawyer makes sure that the court considers pension entitlements.

With the explanation of what we contemplate bringing forward in the Bill, and of what we are doing regarding the more difficult issues involved in splitting the pension, I hope that my noble friend will be able to withdraw the amendment.


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