Select Committee on Social Security Fifth Report


Memorandum submitted by the National Association of Pension Funds (NAPF) (PS 15)

  1. The NAPF continues to support the principle of pension sharing based on a clean break between the divorcing couple. We believe that occupational pension schemes will do all they can to ensure the success of pension sharing provided that

    (i)  they are giving adequate time to prepare for the new arrangements;

    (ii)  the procedures are not unduly complex or expensive to implement; and

    (iii)  trustees and administrators do not find themselves involved in disputes between the divorcing couple and/or their advisers and are not subjected to unjustified or frivolous complaints to the Pensions Ombudsman about the terms of any order or its implementation.

  2. The NAPF is concerned that because the Pensions on Divorce provisions are included in a larger Bill there is a risk that the subject may not receive the detailed attention it requires.

  3. The Clauses contain numerous regulation making powers. Until the regulations are published it is not possible to comment on the detail. Our concern is that pension sharing should be clear and simple for occupational schemes to operate. Regulations should be framed to ensure that the pension sharing regime is workable and cost efficient. We hope that the draft regulations will be published very shortly so that we can comment on them.

  4. We welcome the clarification that pension sharing will only be available to those who begin divorce proceedings after the legislation is in force. We would urge the Government not to proceed with an implementation date of April 2000. It will be extremely difficult for trustees to make the policy decisions required, and to amend their IT systems, administration procedures and scheme literature to meet this deadline.

  5. We welcome the measures proposed to simplify some of the procedures; in particular we are pleased that schemes will not be required to obtain a certificate to hold safeguarded rights. However, the process remains complicated and we would hope that the regulation-making powers will be used to minimise the complexity.

  6. NAPF remains concerned about the need for training about pensions issues generally and pension sharing in particular for all involved in the divorce process. Judges, solicitors and financial advisers will have to understand a significant amount of detail about pensions issues if pension sharing is to be more successful than earmarking.

  7. We note that regulations will require charges to be reasonable. NAPF has already expressed a willingness to draw up a scale of charges based on our extensive knowledge and experience of occupational pension schemes and we look forward to further discussions on this matter.

  8. Although not strictly a matter for the Committee or the Department of Social Security, NAPF continues to believe that members should be allowed to rebuild their pensions following a pension sharing order/agreement. The requirement to record a "negative deferred pension" adds considerably to the complexity of the arrangements.

  9. NAPF looks forward to further discussions with DSS as the regulations are being framed. We will be happy to let the Social Security Committee have clarification of any of the matters raised in this note or any further comments on specific issues, if requested.

8 March 1999

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