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Lord Simon of Glaisdale: My Lords, I am by no means enamoured of the concept of a clean break. But without going into any question of the clean break, does not the noble Lord see the social mischiefs, personal embarrassments and conflicts which would arise with the channelling of the pension through the husband?

Lord Mackay of Ardbrecknish: My Lords, I indicated that I understand that argument, but I also think that the argument that the other method will not bring to the attention of either the husband or the second or subsequent wife the fact that some money is going to the first wife is not valid. Somewhere or other the husband will have to have been shown by the pension company that he has been paid the proper amount of money and that the proper deductions have been made from his pay slip, if I may call it that, or his pension slip. Although I do not yet have a pension—I hope to survive today long enough to get one—I am sure that people expect from their pension company some kind of slip showing how much they are due to be paid and what the various deductions are.

Lord Mishcon: My Lords, I thank the noble Lord for giving way. Perhaps I may say on behalf of every member of the Opposition that we hope that he will have a pension very soon. As the Minister knows that he is dealing with a very delicate and important matter, I wonder whether he will comment on the fact that enforceability, which is obviously a problem when one is dealing with payments that are made through the husband to the first wife, just does not arise in a case where it is paid direct by the pension fund.

Lord Mackay of Ardbrecknish: My Lords, I understand that point, but, as I have just said, to go down the route which the noble Lord, Lord Mishcon, seems to favour would pass the buck, so to speak, and the administrative burdens and costs to the pension fund. I am simply saying that I do not think it is reasonable to do so. I cannot imagine what the noble Lord meant by my pension unless he thinks that he can somehow restrict the years between my present age and the current pension age. I cannot think what else he could possibly have meant.

The noble Baroness, Lady Hollis, suggested that pension splitting should not be mandatory; it should merely be an additional option available to the courts

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for use in cases where the courts consider it appropriate. I have to say to her that making such a highly complicated and potentially costly option available to the courts would result in greater confusion for the divorcing parties and their advisers.

What is needed, and what is delivered by the amendments proposed by my noble friend Lady Young, is a means of ensuring that divorcing couples benefit from the wide range of powers already available to the courts for taking pensions into account. It is clear from most of the anecdotal evidence which has been quoted in the House and in the media that pension rights may not always be taken into account in divorce settlements.

That is borne out by the very recently received preliminary results of the research project which my department has commissioned—research which has quite wrongly been represented as being unnecessary. Interviews with a sample of divorced women whose husbands were in an occupational pension scheme reveal that some two-thirds of the women concerned say that pension rights were simply not discussed during the settlement process. I stress that this is only preliminary information from the research project but it is a very useful pointer to the direction in which we should be travelling.

I was asked to interpret what "taking into account" and various other words in my noble friend's amendment mean. I really think that it is my noble and learned clansman the Lord Chancellor who should have to do that, but I shall make a try at it. There is a duty on the courts, under the amendment proposed by my noble friend, to consider pension rights in the settlement. It is entirely at the courts' discretion—there is a lot of support for this—how they take account of these rights and what they do with them. That is the point of leaving this whole matter to the courts —to allow them to make a decision on the case they have in front of them.

I urge the House to accept Amendments Nos. 225 and 247 which are proposed by my noble friend Lady Young and which the Government are happy to accept. By making it clearer that pension rights must be taken into account in all divorce settlements, it will bring considerable benefits to a significant number of divorced women (and it will apply equally to men where it is the woman who has the pension rights). It will raise the awareness of divorcing couples and their advisers of the options available. It will enhance the flexibility for the courts to decide the most appropriate and equitable form of settlement, having regard to all the circumstances of each individual case. It will leave the courts free to vary the settlement at the request of either party should their financial or family circumstances change before, or after, the pension comes into payment. It will not prevent the courts from deciding on a clean-break settlement if that is feasible and desirable in a particular case. And it will avoid the enormous turbulence involved in disturbing every form of pension provision, which would be the inevitable consequence of pension splitting—with all of the difficulties and costs which I have described.

In short, Amendments Nos. 225 and 247 offer by far the best, quickest and most cost-effective prospect of achieving something really worth while for women. If it

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is adopted, we shall of course keep the matter under review. And if it appears necessary in the light of experience and of the more comprehensive information that will become available from the research, we shall consider whether there is anything further that we might do. Some noble Lords have suggested that this Bill provides the one and only opportunity. I certainly hope and expect that the Government will not find it necessary to bring forward a pension Bill of this magnitude again in the foreseeable future. I imagine that that is echoed by a number of noble Lords. But pensions are continuing to evolve and develop and experience has shown that legislation in this field cannot stand still. Indeed, the present Bill has been preceded by five Bills in the past six years which have had some impact on pension arrangements of one kind or another. So it is more than likely that other opportunities will present themselves should the need arise.

This is an important and sensitive issue on which many strongly held views have been expressed. I hope that I have succeeded in clarifying some of the issues. I am extremely grateful to my noble friend for bringing forward a very constructive and workable amendment. I hope that the House will join with me in supporting it and that the noble Baroness, Lady Hollis, will feel able to withdraw her amendment.

4.45 p.m.

Baroness Hollis of Heigham: My Lords, first, I should like to thank the Minister for his full and helpful reply, and again thank the noble Baroness, Lady Young, for speaking so fully to her amendment at this stage and making clear what is intended by it. I echo what she said—that this an issue upon which all Members of your Lordships' House are seeking to find the best way of delivering something that is fair, decent and feasible.

In that context, I should like to make my procedural intentions as clear as possible, if that will help noble Lords and if it does not sound too inflated a way of putting it. I am in a dilemma with which I hope your Lordships will sympathise. I prefer Amendment No. 174. Many noble Lords might prefer Amendment No. 174. It would give the courts full discretion as to which path they should use in the light of family circumstances. But I took very seriously the comment of the noble Baroness that we have an opportunity of banking a substantial and worthwhile improvement—perhaps a step at a time. I do not want to lose the good through pressing what in my view—although it may not be shared by your Lordships—is the best.

What I should like to do, if I can persuade your Lordships to support me, is to ask you not to vote on Amendment No. 174, but instead to support Amendment No. 225 so eloquently spoken to by the noble Baroness, Lady Young, and, in addition, to support my Amendment No. 175 which is an addition to the amendment tabled by the noble Baroness; in other words, if there are any minor problems with that procedure, the other place can amend it.

What is the issue? The issue between those two amendments, and why I hope Amendment No. 175 will command your Lordships' support, is that it deals with

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what I call the CSA problem. The noble Baroness said that there were two problems with the CSA and that they are not raised in the Bill. She is right. The first of those problems is retrospection. She is right that, much as I would wish to, we cannot go down that path. Secondly, she said that the problem with the CSA is that it neglects individual circumstances. She is right, but the amendment would allow us to do that.

However, there is a third problem with the CSA, which I fear, unless the House accepts my addition, we shall revisit, as my noble friend Lord Mishcon and so many noble Lords have said, and that is enforcing payment. That is the only difference between us. That is why it is so important to add to the amendment tabled by the noble Baroness, which I hope noble Lords will all support. Which provision is more likely to ensure a court's decision to provide a flow of income support to the spouse on retirement—depending upon the first husband or the pension fund? The question for your Lordships to consider is which will be more reliable in delivering the income that we all believe the first wife should have. Will it be if it comes from the fund or from the husband? Noble Lords should trust their experience and judgment. Noble Lords know that a pension fund will ensure a more reliable flow of income.

The Government have said that there are practical difficulties. I am sure that there are. There are practical difficulties in any scheme, otherwise we should have addressed the problem many years ago. We should not exaggerate the practical difficulties associated with the addition that I am asking your Lordships to support.

On divorce, the courts will have in any case to assess the cash value of the pension to make a fair allocation of the matrimonial assets. When that is done, the pension records will be flagged with that as part of the obligations of trustees. That is already done now. Many members' pension records are already flagged as to whether they have to pay the guaranteed minimum pension, with arrangements for named dependants, previous part-time service, backdating of equal pay and so on.

As I said, I talked this morning to a senior partner of the pensions and actuarial services company, Binder Hamlyn, within Arthur Andersen. I was told that what my addition would require is no different in principle from some of things already done by schemes today. He said that an extra flag on the records should be entirely manageable.

With your Lordships' consent, I shall withdraw Amendment No. 174. But I shall ask your Lordships to support Amendment No. 175, bearing in mind that that is an addition to the amendments so eloquently spoken to by the noble Baroness, Lady Young. It would not in any sense alter the apportionment of money between husband and wife, which would be determined by the courts, quite rightly. The addition would ensure that that apportionment of pension rights determined by the courts would flow securely to the wife.

There would be no need to ask an elderly lady of possibly 75 to pursue her husband through the courts, clogging-up the system, demanding legal aid and causing immense unnecessary distress to all parties. The choice is yours, but I hope that, while we cannot suggest

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a clean break, we can at least ensure a cleaner and more civilised way of ensuring that the first wife receives what the courts say is due to her—a flow of spousal income paid by the pension fund. I intend to withdraw Amendment No. 174, with the leave of the House, and hope that your Lordships will support me when I move Amendment No. 175 as an addition to the amendment tabled by the noble Baroness, Lady Young.

Amendment, by leave, withdrawn.

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