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Lord Eatwell: My Lords, before the noble Lord sits down, can he explain why the Government feel it appropriate to subsidise a more expensive and less efficient provision in order that that more expensive and less efficient provision can be available? If I wish to travel up to Cambridge this evening I have a choice of going by car or by train. Each would involve a different price. However, I could be taken by horse-drawn carriage—by large numbers of well bred black horses. That would be rather expensive and rather inefficient. But no doubt on the Government's logic they would be very happy to subsidise the process so that I would then have the extra choice.

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It is a ludicrous argument that one should provide less efficient services but ensure that those less efficient and more expensive services are provided by charging the taxpayer. The taxpayer has to provide. The Minister made no attempt to answer the argument put forward by my noble friend Lord Haskel. Why do the Government subsidise an admittedly more expensive and less efficient service?

Lord Mackay of Ardbrecknish: My Lords, I am interested that the noble Lord has decided to intervene rather than allow his noble friend to carry on the discussion which we have had now for the third time. I have explained the matter three times: first, there is SERPS forgone. It is an important principle if they do opt out to make sure that the SERPS forgone is covered. Secondly, I explained that money purchase schemes, by the way they receive their rebate, get their money quicker than do personal pensions. Thirdly, as I have also explained, the costs of administering fully individualised pension schemes are higher. That has to be taken into account as well. The noble Lord, Lord Eatwell, shakes his head. The conclusion is quite simple and there is a divide between us. The party opposite is not keen on personal pensions.

Lord Eatwell: Taxpayers' subsidies!

Lord Mackay of Ardbrecknish: My Lords, it depends which way one looks at it. We are looking at it from the point of view of the individual and making sure that if the individual opts out he does so with sufficient resources to ensure that his personal scheme gives the equivalent of the SERPS given up. That is the position.

This whole debate has been going on for a few years since we introduced personal pensions. I believe that approved personal pensions are a positive addition to the armoury of pension provision—

Noble Lords: Oh!

Lord Mackay of Ardbrecknish: There you are, my Lords. You are hearing the objection that the party opposite has to personal pensions. I am glad that from their sedentary positions they have indicated that. We believe that it is an important part of the array of choices available to an individual and, in particular, available to an individual whose employer does not provide a pension scheme.

Lord Haskel: My Lords, it is only since I came to your Lordships' House that I have learnt about level playing fields. In the industry I come from we know only about level battlefields.

In many cases it is just not best to contract out of SERPS. It is only because of this artificial subsidy which the Government give out of taxpayers' money that makes it worth while to contract out of SERPS. Let the insurance companies find a way of cutting costs and making the personal pension schemes competitive instead of the taxpayer paying for it. So far as concerns those whose only alternative is a personal pension, let the insurance companies deal with that market.

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There seems to be an inconsistency here. However, I shall not take the matter further. I am sure that it will be picked up in another place, possibly by the people on the Treasury Bench. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 11 not moved.]

6.45 p.m.

Lord Meston moved Amendment No. 12:

Before Clause 150, insert the following new clause:

("Life assurance for pensions or divorce

—(1) The Matrimonial Causes Act 1973 is amended as follows.
(2) After paragraph (1) (f) of section 23 there is inserted—
"(g) an order requiring either party to the marriage who is the member of a pension scheme:—
(i) to nominate the other party or a child of the family for benefits under the scheme as may be specified;
(ii) to effect such policy or policies of life assurance for the benefit of the other party or of a child of the family as may be specified for the purpose of compensating the other party or child against loss of widow's or dependant's benefits under the scheme;
(iii) to nominate the other party or a child of the family as a beneficiary under any existing policy or policies of life assurance as may be specified for the same purpose; and
(iv) to make such contributions to the scheme and pay such premiums in respect of any such policy for such term as may be specified;"
(3) In section 23(2) the word "and" is omitted where it first appears, and after "(f)" there is inserted "and (g)"
(4) After subsection (6) of section 23 there is inserted—
"(7) Any order made under subsection (1) (g) above may contain such directions for notification to the trustees or administrators of any pension scheme and for compliance with any conditions for the implementation and maintenance of any life assurance (including medical examination) and other directions as the court thinks fit."
(5) After paragraph (2) (f) of section 31 there is inserted—
"(g) any order made under section 23(1) (g) above."").

The noble Lord said: My Lords, at Report stage amendments were approved to give wider power to the divorce courts to consider actual or potential pension rights and benefits. Those amendments appear in the Bill at present rather disjointedly as Clauses 85 and 150. To add to the confusion, each clause introduces a new Section 25B to the Matrimonial Causes Act 1973, something which I hope will be tidied up later in the passage of the Bill. Meanwhile, Amendment No. 12 is intended to take matters one short step further before the Bill leaves this House by giving effect to a specific recommendation of the excellent PMI report on pensions and divorce.

It is primarily to enable the court to require a pension scheme member who is a party to a divorce to take out life assurance for the benefit of the other party or for the benefit of a child in order to protect against loss of widows' benefits or loss of dependants' benefits under the scheme or schemes concerned. This amendment endeavours to provide various options. The first is to require the member to nominate the spouse or ex-spouse or children to the trustees of the scheme for

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consideration for benefits in the event of death. Depending on the nature of those benefits and the effect of divorce under the terms of the scheme and on the attitude of the trustees, such a nomination may be enough to protect those involved.

In other cases, a nomination may not be enough; for example, where the scheme does not treat an ex-spouse as a dependant or where another spouse and other children may also make claims against the scheme or where trustees make clear that they are not going to be bound in the future exercise of their discretion. For that problem it is proposed that the court should henceforth have a power to require the other spouse to take out life assurance or to use existing policies, if there are any. The latter may be useful if there is a possibility that the scheme member's health may make new insurance hard or expensive to obtain.

The amendment proposed to Section 23(2) of the Matrimonial Causes Act would enable such an order to be made before the actual decree of divorce. It can be important to try to get cover in place at an early stage in proceedings if there is a risk of the scheme member dying while he is domiciled abroad, leaving his spouse or ex-spouse without having achieved a substantive order from the court and without leaving her with rights to claim against his estate under the Inheritance (Provisions of Family and Dependants) Act 1975.

Since a decision of the Court of Appeal in the case of Milne in 1981 it has been well recognised, with some regret by the courts, that there is no power in the present matrimonial legislation to order a spouse to take out a life policy. This amendment endeavours to fill that gap, at least so far as concerns loss of pension benefits. I hope it is an uncontroversial amendment, building as it does a little further on what was done in respect of divorce cases on Report. I beg to move.

Lord Simon of Glaisdale: My Lords, this is a starred amendment, for which the noble Lord, Lord Meston, is not in any way to be blamed because there have been only three working days since Report stage. The noble Lord the Leader of the House managed to convince himself—but possibly not all of your Lordships—that that meant three working days plus a weekend which, of course, it does not because your Lordships do not spend the whole of every weekend at your desks in Westminster.

As this is a starred amendment, I confess that I am not fully conversant with what it does. It may need tidying up at some later stage. It does not go as far as I think that the law should go; namely, to arm the courts with the widest discretion to deal with pension rights as is just in the circumstances.

On Report, the noble Baroness, Lady Young, moved what was then Amendment No. 225, and the noble Baroness, Lady Hollis, moved an amendment that was more specific. I hope that I may say without impertinence that I am an avowed admirer of the noble Baroness, Lady Young, but I am afraid that her amendment did no more than restate the existing law, as was pointed out by the noble Lord, Lord Meston, with the encouragement of all the other practitioners with whom he had discussed the matter. The amendment

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did no more than restate the existing law because the existing law states that the court must have regard to the pension rights—that is, the accrual of a pension—of one party and its deprivation, by divorce, to the other.

The amendment that has been moved by the noble Lord, Lord Meston, does not go the whole way, but it does go some way and it should certainly be accepted. The crucial case is where the only matrimonial asset is a pension right. If there are abundant finances so that a financial provision can be made, or if there is abundant property so that a property adjustment order may be made, there is no difficulty. If the finance and the property are sufficient to offset the loss of a pension right, there is no difficulty. The whole difficulty which must be faced but which has not, I am afraid, been faced by the Government is when the pension right is virtually the only matrimonial asset.

The most extraordinary cases can occur under the 1969 Act, which was consolidated in 1973. By that extraordinary Act —that deplorable Act—a husband may brutalise his wife; he may be flagrantly unfaithful to her; he may leave her for another woman but, at the end of five years, he may cast her off even though she has performed substantially all the responsibilities of a wife. That is most extraordinary, but the matter does not rest there. Not only can a husband cast off his wife, but he can deprive her by casting her into penury. There are certain women in those positions who do not choose to divorce their husbands. There may be conscientious objections or it may be that they do not wish to lose the pension rights, but the 1969 Act took no cognisance of that. Regardless of whether or not a wife had conscientious objections; whether a wife would be deprived of the only remaining matrimonial asset; whether her husband had behaved with flagrant brutality and profligacy; whether a wife had substantially performed her matrimonial responsibilities, she could be repudiated at the end of five years' separation.

While the matrimonial law remains in that state—the latest proposals show no sign of improvement—the least that we can do is to see that a wife is not ill-treated financially and property-wise as well as in the marital home. The amendment goes some way to rectifying that situation. It is the very least that can be done and I hope that your Lordships will accept the amendment.

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