Welfare Reform and Pensions Bill -
Amendments to be debated in the House of Lords
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Schedule 12
 
  
BY THE BARONESS HOLLIS OF HEIGHAM
 
144     Page 142, leave out lines 14 to 16 
145     Page 142, line 27, leave out from beginning to ("and") in line 30 and insert--
    ("(a)  make any one or more of the orders which it could make under Part II of the 1973 Act if a decree of divorce, a decree of nullity of marriage or a decree of judicial separation in respect of the marriage had been granted in England and Wales, that is to say--
          (i)  any order mentioned in section 23(1) of the 1973 Act (financial provision orders);
          (ii)  any order mentioned in section 24(1) of that Act (property adjustment orders);")
 
146     Page 142, line 37, leave out ("24C(5) and (6)") and insert ("24B(3) to (5)") 
147     Page 142, line 38, at end insert ("and nullity);") 
148     Page 142, leave out lines 39 and 40 
149     Page 142, line 41, leave out ("section 24F") and insert ("section 24C") 
150     Page 142, line 42, leave out ("section 24G") and insert ("section 24D") 
151     Page 142, line 42, at end insert (", and
    (c)  at the end there is inserted--
      (l)  section 40A (appeals relating to pension sharing orders which have taken effect)."")
 
152     Page 151, line 19, at end insert-- 
 ("Family Law Act 1996 (c. 27) 
     62A. The Family Law Act 1996 has effect subject to the following amendments.
 
    62B.--(1) Schedule 2 is amended as follows.
 
    (2)  In paragraph 2, for "section 21" there is substituted "sections 21 and 21A".
 
    (3)  In the section set out in that paragraph, for the sidenote there is substituted "Financial provision orders, property adjustment orders and pension sharing orders."
 
    (4)  In that section, in paragraphs (c) and (d) of subsection (2), there is inserted at the end ", other than one in the form of a pension arrangement (within the meaning of section 25D below)".
 
    (5)  In that section, after subsection (2) there is inserted--
        (3)  For the purposes of this Act, a pension sharing order is an order which--
      (a)  provides that one party's--
            (i)  shareable rights under a specified pension arrangement, or
            (ii)  shareable state scheme rights,
 
 
      be subject to pension sharing for the benefit of the other party, and
 
 
      (b)  specifies the percentage value to be transferred."
    (6)  In that section, subsections (3), (4) and (5) become (4), (5) and (6).
 
    (7)  In that section, after subsection (6) (new numbering) there is inserted--
        (7)  In subsection (3)--
      (a)  the reference to shareable rights under a pension arrangement is to rights in relation to which pension sharing is available under Chapter I of Part IV of the Welfare Reform and Pensions Act 1999, or under corresponding Northern Ireland legislation, and
      (b)  the reference to shareable state scheme rights is to rights in relation to which pension sharing is available under Chapter II of Part IV of the Welfare Reform and Pensions Act 1999, or under corresponding Northern Ireland legislation."
    (8)  In that section, subsection (6) becomes subsection (8).
 
    (9)  After paragraph 6 there is inserted--
 
 Pension sharing orders: divorce and nullity 
 
        6A. For section 24B substitute--
 
 Pension sharing orders: divorce     24B.--(1) On an application made under this section, the court may at the appropriate time make one or more pension sharing orders.
        (2)  The "appropriate time" is any time--
 
  
      (a)  after a statement of marital breakdown has been received by the court and before any application for a divorce order or for a separation order is made to the court by reference to that statement;
      (b)  when an application for a divorce order has been made under section 3 of the 1996 Act and has not been withdrawn;
      (c)  when an application for a divorce order has been made under section 4 of the 1996 Act and has not been withdrawn;
      (d)  after a divorce order has been made.
        (3)  The court shall exercise its powers under this section, so far as is practicable, by making on one occasion all such provision as can be made by way of one or more pension sharing orders in relation to the marriage as it thinks fit.
        (4)  This section is to be read subject to any restrictions imposed by this Act and to section 19 of the 1996 Act.
 
 Restrictions affecting section 24B.     24BA.--(1) No pension sharing order may be made under section 24B above so as to take effect before the making of a divorce order in relation to the marriage.
        (2)  The court may not make a pension sharing order under section 24B above at any time while the period for reflection and consideration is interrupted under section 7(8) of the 1996 Act.
        (3)  No pension sharing order may be made under section 24B above by virtue of a statement of marital breakdown if, by virtue of section 5(3) or 7(9) of the 1996 Act (lapse of divorce process), it has ceased to be possible--
      (a)  for an application to be made by reference to that statement; or
      (b)  for an order to be made on such an application.
        (4)  No pension sharing order may be made under section 24B above after a divorce order has been made, except--
      (a)  in response to an application made before the divorce order was made; or
      (b)  on a subsequent application made with the leave of the court.
        (5)  A pension sharing order under section 24B above may not be made in relation to a pension arrangement which--
      (a)  is the subject of a pension sharing order in relation to the marriage, or
      (b)  has been the subject of pension sharing between the parties to the marriage.
        (6)  A pension sharing order under section 24B above may not be made in relation to shareable state scheme rights if--
      (a)  such rights are the subject of a pension sharing order in relation to the marriage, or
      (b)  such rights have been the subject of pension sharing between the parties to the marriage.
        (7)  A pension sharing order under section 24B above may not be made in relation to the rights of a person under a pension arrangement if there is in force a requirement imposed by virtue of section 25B or 25C below which relates to benefits or future benefits to which he is entitled under the pension arrangement.
        (8)  In this section, "period for reflection and consideration" means the period fixed by section 7 of the 1996 Act.
 
 Pension sharing orders: nullity of marriage.     24BB.--(1) On or after granting a decree of nullity of marriage (whether before or after the decree is made absolute), the court may, on an application made under this section, make one or more pension sharing orders in relation to the marriage.
        (2)  The court shall exercise its powers under this section, so far as is practicable, by making on one occasion all such provision as can be made by way of one or more pension sharing orders in relation to the marriage as it thinks fit.
        (3)  Where a pension sharing order is made under this section on or after the granting of a decree of nullity of marriage, the order is not to take effect unless the decree has been made absolute.
        (4)  This section is to be read subject to any restrictions imposed by this Act.
 
 Restrictions affecting section 24BB.     24BC.--(1) A pension sharing order under section 24BB above may not be made in relation to a pension arrangement which--
    (a)  is the subject of a pension sharing order in relation to the marriage, or
      (b)  has been the subject of pension sharing between the parties to the marriage.
        (2)  A pension sharing order under section 24BB above may not be made in relation to shareable state scheme rights if--
      (a)  such rights are the subject of a pension sharing order in relation to the marriage, or
      (b)  such rights have been the subject of pension sharing between the parties to the marriage.
        (3)  A pension sharing order under section 24BB above may not be made in relation to the rights of a person under a pension arrangement if there is in force a requirement imposed by virtue of section 25B or 25C below which relates to benefits or future benefits to which he is entitled under the pension arrangement."
 
 
        62C.--(1) Schedule 8 is amended as follows.
        (2)  In paragraph 9--
      (a)  in sub-paragraph (2)--
            (i)  for "or 24A" there is substituted ", 24A or 24B", and
            (ii)  for "to 24A" there is substituted "to 24BB", and
      (b)  in sub-paragraph (3), after paragraph (a) there is inserted--
      (aa)  for "or 24B" substitute ", 24B or 24BB";".
    (3)  In paragraph 10, in sub-paragraph (2), for "24A" there is substituted "24BB".
 
    (4)  For paragraph 11 there is substituted--
        11. In each of sections 25B(3) and 25C(1) and (3), for "section 23" substitute "section 22A or 23".
        11A. In section 25D--
      (a)  in each of subsections (1)(a), (2)(a) and (ab) and (2C)(c)(i), for "section 23" substitute "section 22A or 23", and
      (b)  in subsection (3), in the definition of "shareable state scheme rights", for "section 21A(1)" substitute "section 21(3)"."
    (5)  In paragraph 16, in sub-paragraph (2), at the end there is inserted--
      (f)  after paragraph (f) there is inserted--
      (fa)  a pension sharing order under section 24B which is made at a time when no divorce order has been made, and no separation order is in force, in relation to the marriage;"
      (g)  in paragraph (g), for "24B" substitute "24BB"."
    (6)  In that paragraph, after sub-paragraph (3) there is inserted--
        (3A)  In subsection (4A), after "paragraph" insert "(de), (ea), (fa) or"."
    (7)  In that paragraph, in sub-paragraph (4), for the words from "subsection (4)" to the end of the first of the inserted subsections there is substituted "subsection (4A) insert-", the second of the inserted subsections is renumbered "(4AA)" and after that subsection there is inserted--
        (4AB)  No variation of a pension sharing order under section 24B above shall be made so as to take effect before the making of a divorce order in relation to the marriage."
    (8)  In that paragraph, after sub-paragraph (4) there is inserted--
        (4A)  In subsection (4B), after "order" insert "under section 24BB above"."
    (9)  In that paragraph, after sub-paragraph (7) there is inserted--
        (8)  After subsection (7F) insert--
        (7FA)  Section 24B(3) above applies where the court makes a pension sharing order under subsection (7B) above as it applies where the court makes such an order under section 24B above."
        (9)  In subsection (7G)--
      (a)  for "Subsections (3) to (5) of section 24B" substitute "Section 24BA(5) to (7)", and
      (b)  for "that section" substitute "section 24B above"."
    (10)  After that paragraph there is inserted--
        16A. After section 31A insert--
 
 Discharge of pension sharing orders on making of separation order.     31B. Where, after the making of a pension sharing order under section 24B above in relation to a marriage, a separation order is made in relation to the marriage, the pension sharing order is discharged.""
        (11)  In paragraph 19, in sub-paragraph (3)--
      (a)  after "24A" there is inserted ", 24B", and
      (b)  after "property adjustment order," there is inserted "any pension sharing order,".
        (12)  In paragraph 21--
      (a)  after "24,", in the first place, there is inserted "24B,", and
      (b)  for "24,", in the second place, there is substituted "24BB,".
        (13)  After paragraph 25 there is inserted--
        25A. In section 52(2)(aa), for "section 21A" substitute "section 21"."
 
 
        (14)  In paragraph 32, in sub-paragraph (2), for the words from "the words" to the end there is substituted "paragraph (a) substitute--
      (a)  make one or more orders each of which would, within the meaning of Part II of the 1973 Act, be a financial provision order in favour of a party to the marriage or a child of the family or a property adjustment order in relation to the marriage,".
    (15)  In that paragraph, in sub-paragraph (3), for "21(a)" there is substituted "21(1)(a)".
 
    (16)  In that paragraph, after sub-paragraph (3) there is inserted--
        (3A)  For section 21(1)(ba) substitute--
      (ba)  sections 24BA(5) to (7) (provisions about pension sharing orders in relation to divorce);
      (baa)  section 24BC(1) to (3) (provisions about pension sharing orders in relation to nullity);".
        (3B)  In section 21(3), for "section 23" substitute "section 22A or 23."")
 
152A     Page 151, line 21, at end insert-- 
 ("Bankruptcy (Scotland) Act 1985 (c. 66) 
     62D. The Bankruptcy (Scotland) Act 1985 has effect subject to the following amendments.
 
    62E. In section 35(1), in paragraph (a) for "under the said section 8(2) for the transfer of property by him" substitute "a court has, under the said section 8(2), made an order for the transfer of property by him or made a pension sharing order".
 
    62F. After section 36C there is inserted--
 
 Recovery of excessive contributions in pension-sharing cases.     36D.--(1) For the purposes of section 34 of this Act, a pension-sharing transaction shall be taken--
    (a)  to be a transaction, entered into by the transferor with the transferee, by which the appropriate amount is transferred by the transferor to the transferee; and
    (b)  to be capable of being an alienation challengeable under that section only so far as it is a transfer of so much of the appropriate amount as represents excessive contributions.
    (2)  For the purposes of section 35 of this Act, a pension-sharing transaction shall be taken--
    (a)  to be a pension sharing order made by the court under section 8(2) of the Family Law (Scotland) Act 1985; and
    (b)  to be an order capable of being recalled under that section only so far as it is a payment or transfer of so much of the appropriate amount as represents excessive contributions.
    (3)  For the purposes of section 36 of this Act, a pension-sharing transaction shall be taken--
    (a)  to be something (namely a transfer of the appropriate amount to the transferee) done by the transferor; and
    (b)  to be capable of being an unfair preference given to the transferee only so far as it is a transfer of so much of the appropriate amount as represents excessive contributions.
    (4)  Where--
    (a)  an alienation is challenged under section 34;
    (b)  an application is made under section 35 for the recall of an order made in divorce proceedings; or
    (c)  a transaction is challenged under section 36,
if any question arises as to whether, or the extent to which, the appropriate amount in the case of a pension-sharing transaction represents excessive contributions, the question shall be determined in accordance with subsections (5) to (9).
 
     (5)  The court shall first determine the extent (if any) to which the transferor's rights under the shared arrangement at the time of the transaction appear to have been (whether directly or indirectly) the fruits of contributions ("personal contributions")-- 
  
    (a)  which the transferor has at any time made on his own behalf, or
    (b)  which have at any time been made on the transferor's behalf,
to the shared arrangement or any other pension arrangement.
 
    (6)  Where it appears that those rights were to any extent the fruits of personal contributions, the court shall then determine the extent (if any) to which those rights appear to have been the fruits of personal contributions whose making has unfairly prejudiced the transferor's creditors ("unfair contributions").
 
    (7)  If it appears to the court that the extent to which those rights were the fruits of unfair contributions is such that the transfer of the appropriate amount could have been made out of rights under the shared arrangement which were not the fruits of unfair contributions, then the appropriate amount does not represent excessive contributions.
 
    (8)  If it appears to the court that the transfer could not have been wholly so made, then the appropriate amount represents excessive contributions to the extent to which it appears to the court that the transfer could not have been so made.
 
    (9)  In making the determination mentioned in subsection (6) the court shall consider in particular--
    (a)  whether any of the personal contributions were made for the purpose of putting assets beyond the reach of the transferor's creditors or any of them; and
    (b)  whether the total amount of any personal contributions represented, at the time the pension sharing arrangement was made, by rights under pension arrangements is an amount which is excessive in view of the transferor's circumstances when those contributions were made.
    (10)  In this section and sections 36E and 36F--
    appropriate amount", in relation to a pension-sharing transaction, means the appropriate amount in relation to that transaction for the purposes of section 25(1) of the Welfare Reform and Pensions Act 1999 (creation of pension credits and debits);
    excessive contributions" shall be construed in accordance with subsection (2)(b) of section 36A of this Act;
    pension-sharing transaction" means an order or provision falling within section 24(1) of the Welfare Reform and Pensions Act 1999 (orders and agreements which activate pension-sharing);
    shared arrangement", in relation to a pension-sharing transaction, means the pension arrangement to which the transaction relates;
    transferee", in relation to a pension-sharing transaction, means the person for whose benefit the transaction is made;
    transferor", in relation to a pension-sharing transaction, means the person to whose rights the transaction relates.
 
 Recovery orders.     36E.--(1) In this section and section 36F of this Act, "recovery order" means--
    (a)  a decree granted under section 34(4) of this Act;
    (b)  an order made under section 35(2) of this Act;
    (c)  a decree granted under section 36(5) of this Act,
in any proceedings to which section 36D of this Act applies.
 
    (2)  Without prejudice to the generality of section 34(4), 35(2) or 36(5) a recovery order may include provision--
    (a)  requiring the person responsible for a pension arrangement in which the transferee has acquired rights derived directly or indirectly from the pension-sharing transaction to pay an amount to the permanent trustee on the debtor's estate,
    (b)  adjusting the liabilities of the pension arrangement in respect of the debtor,
    (c)  adjusting any liabilities of the pension arrangement in respect of any other person that derive, directly or indirectly, from rights of the debtor under the arrangement,
    (d)  for the recovery by the person responsible for the pension arrangement (whether by deduction from any amount which that person is ordered to pay or otherwise) of costs incurred by that person in complying in the debtor's case with any requirement under section 36C(1) or in giving effect to the order.
    (3)  In subsection (2), references to adjusting the liabilities of a pension arrangement in respect of a person include (in particular) reducing the amount of any benefit or future benefit to which that person is entitled under the arrangement.
 
    (4)  The maximum amount which the person responsible for an arrangement may be required to pay by a recovery order is the lesser of--
    (a)  so much of the appropriate amount as, in accordance with section 36D of this Act, represents the excessive contributions, and
    (b)  the value of the debtor's rights under the arrangement acquired by the transferee as a consequence of the transfer of the appropriate amount.
    (5)  A recovery order which requires the person responsible for an arrangement to pay an amount ("the restoration amount") to the permanent trustee on the debtor's estate must provide for the liabilities of the arrangement to be correspondingly reduced.
 
    (6)  For the purposes of subsection (5), liabilities are correspondingly reduced if the difference between--
    (a)  the amount of the liabilities immediately before the reduction, and
    (b)  the amount of the liabilities immediately after the reduction,
is equal to the restoration amount.
 
 
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