Previous Section Back to Table of Contents Lords Hansard Home Page


Lord Astor of Hever: I thank the Minister for that reply. The noble Baroness may have misunderstood the point of my amendment. I began by saying that it was only a probing amendment. I merely asked for clarification of government opinion. I did not seek to delay the Bill.

I am grateful to my noble friends Lord Buckinghamshire, Lord Clanwilliam and Lady Berners for their support. I agree with my noble friend Lord Buckinghamshire that the subject of pensions and pension sharing is unbelievably complex.

I sought clarification. The Minister has given me a full answer. In the light of that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 19 shall stand part of the Bill?

Lord Astor of Hever: We do not oppose Clause 19 quite as much as the three "p"s in the word "oppose" on the Marshalled List imply.

As pension sharing was hardly touched on at Second Reading, the clause provides me with an opportunity to put on the record that the Opposition support the principle of pension sharing which is fair and affordable to both spouses and which takes account of the interests of children. We shall work constructively with the Government to improve this part of an otherwise bad Bill. Having carefully scrutinised the Bill, we shall be raising a number of concerns where we do not believe that the Government have properly thought matters through.

I trust, therefore, that the Minister will give careful thought to our amendments on pension sharing.

Clause 19 agreed to.

6 Jul 1999 : Column 778

Schedule 3 [Pension sharing orders: England and Wales]:

[Amendments Nos. 46 to 57 had been withdrawn from the Marshalled List.]

Baroness Hollis of Heigham moved Amendment No. 58:


Leave out Schedule 3 and insert the following new Schedule--

("SCHEDULE 3
PENSION SHARING ORDERS: ENGLAND AND WALES

1. The Matrimonial Causes Act 1973 is amended as follows.
2. After section 21 there is inserted--
"Pension sharing orders.
21A.--(1) 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.
(2) In subsection (1)--
(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,
(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, and
(c) "party" means a party to a marriage."
3. In section 24 (property adjustment orders in connection with divorce proceedings, etc), in paragraphs (c) and (d) of subsection (1), there is inserted at the end ", other than one in the form of a pension arrangement (within the meaning of section 25D below)".
4. After section 24A there is inserted--
"Pension sharing orders in connection with divorce proceedings etc.
24B.--(1) On granting a decree of divorce or a decree of nullity of marriage or at any time thereafter (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) A pension sharing order under this section is not to take effect unless the decree on or after which it is made has been made absolute.
(3) A pension sharing order under this section 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 Jul 1999 : Column 779


(4) A pension sharing order under this section 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.
(5) A pension sharing order under this section 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.
Pension sharing orders: duty to stay.
24C.--(1) No pension sharing order may be made so as to take effect before the end of such period after the making of the order as may be prescribed by regulations made by the Lord Chancellor.
(2) The power to make regulations under this section shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
Pension sharing orders: apportionment of charges.
24D. If a pension sharing order relates to rights under a pension arrangement, the court may include in the order provision about the apportionment between the parties of any charge under section 37 of the Welfare Reform and Pensions Act 1999 (charges in respect of pension sharing costs), or under corresponding Northern Ireland legislation."
5. In section 25 (matters to which the court is to have regard in deciding how to exercise its powers with respect to financial relief)--
(a) in subsection (1), for "or 24A" there is substituted ", 24A or 24B", and
(b) in subsection (2), for "or 24A" there is substituted "24A or 24B".
6. In section 25A(1) (court's duty to consider desirability of exercising power to achieve clean break), for "or 24A" there is substituted ", 24A or 24B".
7.--(1) Section 31 (variation, discharge etc. of certain orders for financial relief) is amended as follows.
(2) In subsection (2), at the end there is inserted--
"(g) a pension sharing order under section 24B which is made at a time before the decree has been made absolute."
(3) After subsection (4) there is inserted--
"(4A) In relation to an order which falls within paragraph (g) of subsection (2) above ("the subsection (2) order")--
(a) the powers conferred by this section may be exercised--
(i) only on an application made before the subsection (2) order has or, but for paragraph (b) below, would have taken effect; and
(ii) only if, at the time when the application is made, the decree has not been made absolute; and
(b) an application made in accordance with paragraph (a) above prevents the subsection (2) order from taking effect before the application has been dealt with.
(4B) No variation of a pension sharing order shall be made so as to take effect before the decree is made absolute.
(4C) The variation of a pension sharing order prevents the order taking effect before the end of such period after the making of the variation as may be prescribed by regulations made by the Lord Chancellor."
(4) In subsection (5)--
(a) for "(7F)" there is substituted "(7G)",

6 Jul 1999 : Column 780


(b) for "or (e)" there is substituted ", (e) or (g)", and
(c) after "property adjustment order" there is inserted "or pension sharing order".
(5) In subsection (7B), after paragraph (b) there is inserted--
"(ba) one or more pension sharing orders;".
(6) After subsection (7F) there is inserted--
"(7G) Subsections (3) to (5) of section 24B above apply in relation to a pension sharing order under subsection (7B) above as they apply in relation to a pension sharing order under that section."
(7) After subsection (14) there is inserted--
"(15) The power to make regulations under subsection (4C) above shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament."
8. In section 33A (consent orders), in subsection (3), in the definition of "order for financial relief", after "24A" there is inserted ", 24B".
9. In section 37 (avoidance of transactions intended to prevent or reduce financial relief), in subsection (1), after "24," there is inserted "24B,".
10. After section 40 there is inserted--
"Appeals relating to pension sharing orders which have taken effect.
40A.--(1) Subsections (2) and (3) below apply where an appeal against a pension sharing order is begun on or after the day on which the order takes effect.
(2) If the pension sharing order relates to a person's rights under a pension arrangement, the appeal court may not set aside or vary the order if the person responsible for the pension arrangement has acted to his detriment in reliance on the taking effect of the order.
(3) If the pension sharing order relates to a person's shareable state scheme rights, the appeal court may not set aside or vary the order if the Secretary of State has acted to his detriment in reliance on the taking effect of the order.
(4) In determining for the purposes of subsection (2) or (3) whether a person has acted to his detriment in reliance on the taking effect of the order, the appeal court may disregard any detriment which in its opinion is insignificant.
(5) Where subsection (2) or (3) above applies, the appeal court may make such further orders (including one or more pension sharing orders) as it thinks fit, for the purpose of putting the parties in the position it considers appropriate.
(6) Section 24C above only applies to a pension sharing order under this section if the decision of the appeal court can itself be the subject of an appeal.
(7) In subsection (2), the reference to the person responsible for the pension arrangement is to be read in accordance with section 25D(4) above."
11. In section 52 (interpretation), in subsection (2), for "and" at the end of paragraph (a) there is substituted--
"(aa) references to pension sharing orders shall be construed in accordance with section 21A above; and".").

The noble Baroness said: Before I talk specifically about this large group of amendments, I should set the scene by drawing noble Lords' attention to some recent developments which have made these necessary.

The Lord Chancellor recently announced that it was no longer the Government's intention to implement Part II of the Family Law Act 1996 in the year 2000. The 1996 Act would, if implemented, introduce a new divorce process to England and Wales. Noble Lords who have taken part in those debates will know that

6 Jul 1999 : Column 781

Part II proposed to save saveable marriages; to promote conciliatory attitudes to divorce; and to seek above all to ensure the well-being and welfare of children.

Information meetings were to be a key element of the new divorce process established by the 1996 Act. Over the past two years, the Government have been piloting different types of information meetings in an effort to find one that meets our aims--which are: to save marriages when we can, to engender a conciliatory culture in which marriages that are going to break up may proceed to divorce and to care for the children of marriage. Regrettably, the preliminary findings of the pilots were disappointing. There have been 14 pilots involving 7,000 people in information meetings. Some 90 per cent of the people concerned found those information meetings useful, but only 7 per cent went on to mediation; only 13 per cent went to marriage guidance counsellors; and I am afraid that 39 per cent said that they were more likely to see a solicitor. That was not the original intention of the meetings.

In the light of that research, the pilots and those findings, the Government have decided that it would be premature to implement Part II in the near future. We will await the final results of the research and consider whether any further research should be instituted before forming a view about what the next step should be in this important area of social policy. Those results will be available in the spring of 2000.

The decision to delay implementation of Part II of the Family Law Act 1996 beyond 2000 has a significant consequence for the pension sharing provisions in this Bill. The pension sharing provisions in the Bill are currently drafted on the basis that the Family Law Act will have been implemented. That is why mention is made of the "statement of marital break-down" and the "period of reflection and consideration", for example, which are created by Part II of the Family Law Act.

However, we can no longer assume that the new divorce process set out in the Family Law Act will be implemented before we are ready to bring the pension sharing provisions into force--which we want to do as soon as possible. Therefore, we must change the Bill almost belt and braces style so that pension sharing can be made available under today's divorce law as well as under the new procedures that would be established by the Family Law Act--otherwise the one would depend upon the other and we would push pension sharing into the long grass.

Therefore, we have brought forward a package of amendments--I apologise for their number--Amendments Nos. 58 to 69 and 144 to 166. Under these amendments, pension sharing would be made available under current divorce law as established by the 1973 Act in its present form; and it could be made available under the divorce law that would be established by the 1996 Act if, as remains possible, Part II of the Family Law Act is implemented before pension sharing. In addition, the amendments would allow for the divorce law to be changed to that of the 1996 Act after the pension sharing provisions had come into force under the current divorce law. With these amendments in place, all three possible eventualities are covered: that

6 Jul 1999 : Column 782

Part II does not come into force; that Part II comes into force before pension sharing happens; or that Part II comes into force only after pension sharing has been established.

These amendments, therefore, are largely technical and apply only to England and Wales. They simply allow pension sharing to happen whatever divorce law is in force--the 1973 Act or the 1996 Act. Scotland has separate legislation that is unaffected by the Lord Chancellor's announcement. Noble Lords should note that the principal effect of the amendments is to restructure the pension sharing provisions in the Bill--that is, to bring them within the concurrent ambit of the 1973 Act--and not to change their substance in any significant way.

Having said that the amendments are largely technical, we recognise that they are also complex. That is why we have tried to assist noble Lords by producing a set of supplementary explanatory notes that describe the Government's amendments in more detail.

Because I think that they are important, I will turn now to the substance of the amendments, beginning with Amendment No. 58 which concerns Clause 19 and Schedule 3 to the Bill. Amendment No. 58 provides a new version of Schedule 3 to replace the Schedule 3 in the current print of the Bill. That is necessary in order to ensure that we can proceed with pension sharing under the framework of the Matrimonial Causes Act 1973. In my following comments, references to Schedule 3 will be to the new schedule that would be inserted by Amendment No. 58.

Schedule 3 amends Part II of the Matrimonial Causes Act 1973. The clause gives courts in England and Wales the power to make pension sharing orders in relation to proceedings for divorce or nullity of marriage. The provisions in Schedule 3 will allow pension rights to be treated like other assets when a couple divorces or the marriage is annulled. The provisions will allow a proportion, or all, of the value of the pension to be transferred from one spouse to the other as part of the overall financial settlement.

There are six main points to be made about the amended schedule. The first is a general point. There is only a small difference between the substance of this new schedule and Schedule 3 as it appears in the current print of the Bill. That is because there is no longer a distinction drawn between divorce and nullity. Under the Family Law Act, the procedure for ending a marriage by divorce would have been very different from the procedure for ending a marriage by annulment. Under the Matrimonial Causes Act, the procedure is broadly the same and the relevant powers of the court to grant financial relief are identical.

Secondly, the schedule places pension sharing within the framework of the existing divorce law in England and Wales. A pension sharing order will be able to be made on or after the granting of a decree of divorce. This follows the pattern of the other principal types of ancillary relief order set out in the Matrimonial Causes Act 1973. The court may make an order before the divorce is finalised, but the pension sharing process will take effect only after the decree of divorce has been made absolute.

6 Jul 1999 : Column 783

Thirdly, as under the current Bill, pension sharing orders will be subject to a stay period. No action should be taken on the order during that period. This will allow either party to appeal it. The pension sharing order will be stayed at least until the end of the appropriate period for giving notice of appeal. So pension sharing orders will not become effective until both the decree of divorce has been made absolute and the stay period has expired.

Fourthly, although appeals up to and beyond the point of implementation of the pension sharing order will be possible, the court will not be able to set aside or vary an order that has taken effect when it would adversely affect the pension scheme. The court will be able to make such further orders as it thinks fit to put the parties in the position it considers appropriate.

Fifthly, the couple must meet the pension scheme's administrative charges arising from pension sharing. When the couple shares by order, the court can apportion the administrative expenses arising from the share between the couple in a way that is just and equitable. If the court chooses not to exercise this power, the member spouse will be expected to pay the charges. The question of who pays should be seen as an aspect of the overall financial settlement.

Sixthly--and finally--the Bill restricts the combination of ear-marking and pension sharing orders and the making of multiple pension sharing orders in relation to any given pension. This is an important provision because we want to encourage couples to achieve a clean break if that is appropriate for them. We need to be fair to both parties--former spouses should not have several bites of the cherry and the scheme member's remaining pension should be safe from the former spouse. We also need to protect the position of previous spouses. A simple illustration may be where a man and his second wife are getting a divorce. At his first divorce, his first wife was granted an ear-marking order. If the second wife were now granted a pension share before the ear-marking order had come into effect because the husband is still below pension age, the husband's pension fund would be reduced, which, in turn, would reduce the first wife's retirement income. She would lose out through no action of her own.

I turn now to Amendment No. 69 which would create a new clause to follow the current Clause 22. Our amendments to the pension sharing provisions begin from the assumption that pension sharing is most likely to be made available--at least initially--under the current divorce law that is contained in the Matrimonial Causes Act 1973. However, this outcome is not yet certain. If, contrary to our present expectations, Part II of the Family Law Act were to be implemented before the pension sharing provisions in this Bill had commenced, the pension sharing provisions would be technically defective--largely as a result of the other amendments that we have tabled for debate today.

To guard against that, this amendment proposes the insertion of a new clause in the Bill--Amendment No. 69--which would give the Lord Chancellor the power to make consequential amendments to any provision in Part III of the Bill that had yet to be

6 Jul 1999 : Column 784

commenced. That would include Schedules 3 and 4. This would enable the Lord Chancellor to make any technical amendments, such as renumbering sections and changing internal references, that would be needed to ensure that the law would work as Parliament had intended. The power would be available only if any of the amendments to the financial relief provisions of the 1973 Act, as amended by the 1996 Act, were to be brought into force before the implementation of Part III of this Bill.

We recognise that this is a power that should be subject to proper scrutiny by Parliament. Noble Lords will note that subsection (2) of the proposed new clause, Amendment No. 69, makes it clear that the exercise of this power would be subject to affirmative resolution by both Houses of Parliament. The Delegated Powers Scrutiny Committee considered that that was an appropriate safeguard for the use of the power. We were of course happy to concur.

The amendments to Schedule 4, Amendments Nos. 61 to 67, amend and refine the earmarking--or more properly "attachment"--provisions that were inserted in the Matrimonial Causes Act 1973 by Section 166 of the Pensions Act 1995, which we all remember with affection. These amendments are minor and cover small drafting corrections or deal with minor technical matters. The provisions of this schedule complement those already considered in Schedule 3.

Members of the Committee may have noticed that Amendments Nos. 1 to 4 and 25 in our supplementary explanatory notes appear to be missing. In fact, the House authorities felt that the small consequential changes to the Bill which would be brought about by these amendments should be achieved through the reprinting process.

The amendment to Clause 22 is consequential on the other changes being made to the Bill and to the 1973 Act as a result of the shift away from the new divorce law structure which will be established by Part II of the Family Law Act 1996. The effect of this amendment is described in detail in the Government's supplementary explanatory notes.

I turn to Clause 79, which is also affected by our main amendment to the draft Bill. It gives effect to the consequential amendments in Schedule 12. It also gives the Secretary of State powers to revoke or amend any secondary legislation as necessary following the coming into force of specified provisions in the Bill.

The Government have put forward two sets of amendments to Schedule 12 which it would be appropriate to consider now. Amendments Nos. 145 to 151 are all minor, technical consequential amendments to provisions in Schedule 12 which would make pension sharing available under the Matrimonial and Family Proceedings Act 1984.

Amendment No. 152 is more complex. It is a prospective amendment to the Family Law Act 1996 which has two purposes. First, numerous prospective amendments to the 1973 Act are contained within Schedules 2, 8 and 10 to the 1996 Act. If we work from the assumption that pension sharing will be brought into force before Part II of the Family Law Act, the

6 Jul 1999 : Column 785

amendments to the 1973 Act which are contained within the 1996 Act will need to be changed because, if they are not, they will be technically defective.

The second purpose of this amendment is more important. It puts forward substitute sections for the 1973 Act which would replace those inserted by Schedule 3 to the Bill as amended. The effect of Amendment No. 152 is to ensure that pension sharing can be made available under the Family Law Act 1996 if Part II of that Act is brought into force after the pension sharing provisions have been commenced.

Clause 80 sets out the transitional provisions which are needed for the whole of this Bill. Amendment No. 153 deletes subsections (3) to (5) of the clause. These subsections were originally included to cater for the possibility that Part II of the Family Law Act 1996 might be brought into force before pension sharing, with the aim of preventing people from re-opening financial settlements arising from divorces which were granted before the implementation of pension sharing. However, if Part II were to be implemented before pension sharing, similar provision to prevent any retrospective action could be made under Clauses 83 and 78(5).

Amendments Nos. 154 to 158 are minor and consequential on Amendment No. 153.

Clause 83 provides powers for the Secretary of State and the Lord Chancellor to bring different parts of the Bill into force at different times. Amendments Nos. 161 and 162 make technical changes to this clause which are consequential on the decision to move from the divorce law framework of the Family Law Act 1996 to that of the Matrimonial Causes Act 1973.

Clause 84 sets out how the different provisions in the Bill extend to different parts of the United Kingdom. Amendments Nos. 165 and 166 are consequential amendments to Clause 84.

Finally, I apologise to the Committee for the great length of time it has taken to move this set of amendments. However, as they were not introduced in the other place, I felt it important to lay them out as fully as possible. Given the additional commentary from the Dispatch Box, I appreciate that Members of the Committee may prefer to return to many of the issues at the Report stage after they have had time to reflect on their implications. If I can help in the meantime, I am happy to do so. I commend this package of amendments to the Committee and I beg to move.


Next Section Back to Table of Contents Lords Hansard Home Page