APPENDIX 1
Letter to Ms Gisela Stuart MP, from Mr
John Denham MP, Parliamentary Under-Secretary of
Social Security (PS 5)
PENSION SHARING ON DIVORCE
Thank you for your letter of 12 June, following
the recent briefing on the draft Pension Sharing Bill.
You ask whether the Government sees this exercise
as primarily about pension provision or property division: you
see the former as more important. Essentially the Bill is intended
to make it easier to share pensions fairly, so in a sense it is
about both the issues you raise.
We believe that the Bill should improve pension
provision for former spouses—in practice, mainly women.
Our recent consultation document (Part 1, Annex B) gives illustrative
figures of the number of people who might benefit. And, as you
say, the former spouse should be able to build on her new pension
share—notably through further pension contributions is she
is employed or self-employed. So pension sharing is an important
step towards security in retirement for women in particular.
Pension sharing also needs to be looked at in
a wider context. Our pensions review is intended to achieve a
consensus on the pensions policy that the country needs so that
men and women can plan for their long-term future. One of the
specific challenges for the review is to narrow the pensions gap
between women and men and our plans for stakeholder pensions,
designed to provide good quality, funded second pensions for people
on low pay or with intermittent working patterns will be of particular
benefit to women. We are also considering ways to develop a citizenship
pension for carers—mainly women—who are unable to
build up a second pension. We received over two thousand responses
to our consultation paper and expect to publish a Green Paper
on pensions generally later this year. Meanwhile, as you know,
we have taken early action to do more for today's pensioners through
measures such as help with fuel bills.
So we are very clear about the importance of
pension rights, including at the time of divorce. But those are
not the only assets that need to be taken into account at that
time. The matrimonial home and other property are also important.
It is only right that the courts, or individual agreements, should
share those fairly too. And that does not necessarily mean splitting
each type of asset in the same proportions: the mix of assets
will differ from case to case, it may be undesirable to sell the
family home, and so on. Settlements also need to take account
of individuals' financial needs from the time of divorce—not
just from the date of retirement. It is unlikely, for example,
that a settlement which provided relatively generously for a former
spouse's pension but left her homeless or destitute at age 45
would be a satisfactory outcome.
That is why the draft Pension Sharing Bill does
not attempt to make pension sharing compulsory, nor to specify
the proportions of any such share. What the Bill will do, if enacted,
is first, to make such sharing possible; and, second, to provide
the same sort of protection for pension rights arising from a
pension-sharing order or agreement that apply now to "normal"
pension rights. I hope you will agree that those are significant
steps towards enabling former spouses to have satisfactory pensions.
Since the issue you raise is one of principle
which may be of interest to the Select Committee generally, I
should be happy to copy this correspondence to them if you are
content for me to do so.
Meanwhile I look forward to discussing pension
sharing with you and the rest of the Committee on Wednesday 24
June.
John Denham
22 June 1998
| 
