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Baroness O'Cathain: I rise to speak to the amendment to which I have attached my name. One of the most compelling issues as regards the amendment is the fact that it is fair and just, as the noble Baroness said. Moreover, from the point of view of business, it would also introduce a system whereby there would be a reduction in administrative costs. It would make the organisation of pension funds as regards trustees that much simpler in the case of divorce. The amendment does not actually support divorce; indeed, it supports the situation which arises after a divorce where there is a break-up of the assets.
The two ways currently available in the case of a divorce have their problems. The first is that pension rights remain undisturbed but the value is taken into account in the allocation of assets and the second is the method of earmarking part of the pension for payment to the time hence when it actually comes into effect. However, the proposed method of splitting the pension is really the most sensible and easy way.
In effect, splitting would mean a one-off administration cost--that is, the calculation and implementation of the transfer payment--and that should not be too difficult. Employers generally regard that as preferable to ongoing record keeping, and so on. Employee relations problems may develop when scheme members find that they do not receive from their employer the full benefit that they expected because of payments direct to a former spouse. That situation would be obviated by the amendment. Indeed, such problems could be exacerbated where a divorce has been bitter. Employers are concerned to avoid involvement in the personal affairs of their employees and, unfortunately, earmarking necessitates such involvement. Again, splitting would allow the employer to make a single payment which would mean an end to contact with the employee's former spouse. Such an arrangement should minimise the danger of employee relations difficulties.
The amendment should also have significant advantages from the perspective of divorcing individuals. Splitting better satisfies the common desire to achieve a clean break, as the noble Baroness said. I say that because each former partner would have his or her own separate assets, whereas earmarking only comes into effect when the scheme member chooses to retire. That may not occur at a time convenient to the former spouse who may not want to begin receiving such payments at an earlier time or, indeed, may have needed such payments far sooner than when the spouse who is receiving the main pension actually received it.
The provision of splitting gives freedom both to the employer and to the individuals concerned. On that practical basis alone, I believe that the proposal has much merit. Indeed, if we add that to all the merits outlined by the noble Baroness, Lady Hollis, I believe that the amendment is one that the Government should take away and act upon.
Earl Russell: I should like to join the noble Baroness, Lady Hollis, in the tribute that she paid to the noble Baroness, Lady Young, for the distinguished work that she has done on the subject and for which we are all extremely grateful. I should also, if I may, like to extend that tribute to the noble Baroness herself for the work that she carried out on the Pensions Bill. Indeed, I am also most grateful to my noble friend Lady Seear in that respect.
Members of the Committee will have observed that I am not my noble friend Lady Seear. Unfortunately, my noble friend is, for reasons beyond her control, unable to be with us until some time around 5 p.m. this evening. Therefore, I have been appointed understudy and it is in that capacity that I now appear before the Committee.
We are discussing an immensely complicated subject. There is one major difficulty which I do not see how we can get around whatever we do; namely, that there is not enough to go around. However, I can see no reason whatever why one party--and I agree with the noble Baroness, Lady O'Cathain, that there is no reason why it should necessarily be the woman--should suffer all the hardship. There is a case for some fairness even in hardship. Therefore, the argument for some form of splitting is a very strong one. Indeed, in terms of moral equity, it is very hard to answer.
The problem that we have to consider is how that ought to be done. I do not believe that I need to repeat the criticisms of the earmarking procedure which both noble Baronesses developed most fully. But I must say that I particularly like the way that the amendment tackles the problem. It seems to me that it follows the principles of drafting set out by the noble Lord, Lord Renton, in the Renton Report, to which I have often paid tribute. It would allow for the statute to state a general principle and for the application of that general principle to circumstances which will be infinitely various to be a matter for the court.
One pension scheme is not like another. Moreover, as the noble Baroness, Lady O'Cathain, pointed out, one retirement age is not like another. It is one of our big difficulties that the retirement of one partner is no longer under the influence of the other after divorce. That is probably the biggest reason why we need outside involvement. There will be immensely variable situations; for example, the numbers of dependants, who may or may not be children of the marriage; capital; property; and inherited resources. Moreover, there are quite severe complications as regards valuing art collections for probate.
Therefore, it will be necessary to consider each case on its merits. If we attempt to legislate in too much detail, we shall run into all the problems that are involved in laying down a formula. I shall not bore noble Lords with my views on those matters. I support the amendment.
I am pleased that the noble Baroness, Lady Hollis, mentioned the saving of income support that results from the division of pensions. The amount of income support spent on topping up the state pension is considerable. I suspect that the amount spent in that regard in the age group 60 to 65 did not form part of the Treasury calculations.
I received a written answer this morning about the number of people over the age of 50 who have been out of work for more than 10 years. The figure is 2.5 million. There will also be a saving of income support in regard to that group. Many of them will have a spouse who is already beyond pension age. I should like to know whether the Treasury has taken that fact into account and reworked the figures and whether the saving is greater than it would otherwise have been.
Lord Simon of Glaisdale: As my name is on the amendment I should like to congratulate the noble Baroness, Lady Hollis, on the amendment and on the speech that she made in support of it. I should also like to congratulate noble Lords who also spoke with such knowledge and intelligence.
Many aspects of marriage fall for consideration under the Bill, but one which is particularly relevant to the amendment is the concept of the norm of traditional marriage as a way of working out the different contributions made by husband and wife, operating co-operatively by way of differentiation of effort in marriage.
The wife inevitably is the child bearer and usually the home-keeper. By reason of those activities, even if she goes back to work, she is at an economic disadvantage. By performing those functions she releases her husband to obtain an economic advantage. Frequently his emolument these days will be paid in part in the form of a pension for work he has done but for which his wife has released him. That is recognised by the widow's pension that is present in most occupational pension schemes. The wife, having made that co-operative effort in the division of labour, is entitled in justice to enjoy that pension. It would be an act of simple injustice if she were to be denied it, without compensation, and if it were to be carried away for the benefit of another woman. After all, divorce is a licence to remarry.
I use the words "without compensation" because the situation is solvable, though frequently with difficulty, when there are sufficient other assets to compensate the divorced wife for the loss of her widow's pension. However, that is not possible if there are insufficient other assets. In those circumstances, if we are to consider justice at all it is essential that there should be some way of securing for her the widow's pension, the earning of which became due to her at negation.
The problem was serious enough under the 1969 Act, but in that case the unilateral repudiation of marriage could take place only after five years. Minimal use has been made of that provision. Under this Bill the situation is far more serious: there is unilateral repudiation simply on one year's notice. The problem is infinitely exacerbated.
The noble Baroness, Lady Hollis, and the noble Baroness, Lady Young, fought valiantly on this issue when we debated the Pension Bill. We got nowhere. We were told that the problem was too complex, which we interpreted as meaning that the Treasury thought it would cost £300 million in loss of income tax. The noble Baroness and the noble Earl on the Conservative Benches have dealt with that aspect of the situation. The problem would be largely solved if one looked at the figures in the way they did under the amendment. The noble Baroness proposes a simple act of justice. There should not be unilateral repudiation of marriage merely
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