Select Committee on Social Security Fifth Report


Memorandum submitted by the National Stepfamily Association (NSA) (PS 13)

  1. NSA is a registered charity whose mission includes a dedication to raise awareness at all levels in society and government of the needs and achievements of all stepfamilies and ensure action is taken to support them. Based in central London, we share a chief executive with Parentline and provide direct help to callers (over 15,000 enquiries in 1997/98) and also provide training, information packs and, through our project work, research into the issues that concern stepfamilies.

  2. We are aware that pension sharing is a real issue for many stepfamilies, both because of the background of the adult members of such families (where at least one has had a previous partner whose child has become a part of the stepfamily) and because, sadly, a greater proportion of second marriages breakdown than first. There is increasing awareness of the need for individuals to provide for their own retirement. For many couples (whether married or not) pension funds are in fact the most valuable asset they have. There has long been recognition of the possibility of inequality where one of the couple has been able to build up such funds to a greater extent than the other.

  3. However, we are aware that the divorce courts (and it is difficult to assess any other than anecdotal evidence in relation to cohabitation) do not like the pension earmarking that was introduced in 1996. Pension sharing is potentially fairer. In considering the issues, we have in this response used the convention that it is the man who has the fund and it is the ex-wife for whom provision is being made.

  4. We see various difficulties in the proposed legislation, some of which are specific to stepfamilies and on which we will concentrate our response.

  4.1 Inland Revenue limits will make it difficult to rebuild pension funds where a husband has been required to share his pension with an ex-wife and thus it will be difficult to provide for his second wife and any family. The tax exemptions enjoyed by pensions mean that any other form of savings will not be as efficient.

  4.2 If the pension is already in payment when the divorce happens, can the ex-wife have her share of income immediately, or does she have to wait until she is of pensionable age? If she has to wait, but the monies have actually been paid across into her separate fund, the husband may have to make such periodical payments for the ex-wife until she can draw on the newly-created pension that his second wife and family will be impoverished until the ex-wife can draw on her new fund.

  4.3 There are inevitable complications in situations where a divorcee has several pension plans. We advocate that it will be best if the values of all are totalled, and then, somewhat in the way the divorce court does now in allocating assets, the split is made in the way to incur fewest penalities (in respect of taxes, professional fees etc.)

  5. We are concerned that a man whose life has contained more than one broken marriage should not be left without the means to support himself and any dependants (children or others) in retirement. The safety net of the state pension must be able to bear the strain in such situations.

  In view of the shortness of time, we have not gone into greater detail. We would welcome the opportunity to give any further guidance on specific issues affecting stepfamilies.

Dr Dorit Braun

Chief Executive

5 March 1999

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