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Baroness Hollis of Heigham: I thought that the noble Lord, Lord Goodhart, had fully answered all the points made by the noble Lord, Lord Astor, and that I did not need to reply. I believe that he did it splendidly. As for the observations of the noble Earl, it seems to me that the substance of his remarks, which is to leave it the courts to decide the matter, is against the push of his noble friend's amendment. I was not quite sure from where he was coming in those circumstances.

The Earl of Clanwilliam: In this context I speak for myself and am not privy to all of the wishes of the party that I support in this matter.

Baroness Hollis of Heigham: I am not surprised by the independence of mind of the noble Earl--the Committee is aware of that--but the fact that the push of his argument appears to be in a rather different direction from the conclusion of his speech. I was puzzled by the fact that all of the noble Earl's arguments appeared to be against the case put by his noble friend but he ended up supporting him.

The amendment moved by the noble Lord, Lord Astor, relates to the combinations in which earmarking and pension sharing orders may co-exist in relation to a pension arrangement or shareable state scheme rights. Amendment No. 58H seeks to restrict the powers of the courts in England and Wales to make pension-sharing orders. It attempts to prevent a pension-sharing order being made in relation to a pension arrangement which has already been the subject of a similar order, i.e. a second bite. The Bill already prevents a former spouse benefiting from a pension share in relation to a particular pension arrangement and then returning to court to seek a second pension share in respect of that arrangement. This amendment seems to be intended to prevent pension sharing by order by second or subsequent former spouses.

I have two main problems with the amendment. First, it would make it more difficult for the court to help the couple achieve a clean break. The second former spouse would still be able to seek an earmarking order and gain access to the member's spouse's pension through that route. The member spouse could be in the strange position of being able to achieve a clean break from a first spouse but not a second to whom he was linked by an earmarking arrangement.

Secondly, this amendment would limit the member spouse's scope for negotiation. Member spouses might prefer to see their pensions divided for a second time to achieve that clean break, especially if they wish to marry again or perhaps because they would rather keep some other asset untouched. As the noble Lord, Lord Goodhart, said, it may be that the first share of the pension is very small because the marriage has lasted for only a year or two years and the substantial asset has been built up during the second marriage. Therefore, it

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would be unreasonable to expect that the only assets to go into the matrimonial financial pot would be, say, the home and other savings, but one would be required to exclude the pension whether or not the couple wished it. Overall, this amendment would limit the court's ability to make a fair financial settlement in England and Wales by removing an option which could be of significant benefit to divorcing couples.

The other amendments fall broadly into two parts. Amendments Nos. 58D to 58G also seek to prevent a pension-sharing order being made in relation to a pension arrangement or state scheme rights that have already been shared as part of a previous divorce or nullity settlement. Presumably, the aim is to protect the value of the pension for the member. Yet the result would be to deprive subsequent spouses of the benefit of pension sharing. It is not apparent that any similar restraint is sought in relation to agreements, as opposed to court orders to pension share. Amendments Nos. 59 and 60 seek to prohibit earmarking where a pension has been shared.

I now turn to these amendments in greater detail. Amendments Nos. 58D to 58G would deprive second or subsequent spouses of the possibility of sharing the member's pension on divorce and limit the options available to secure future financial settlements. A pension may very well be the most valuable asset. Some pensions will be of sufficient value to warrant being shared in more than one divorce settlement. We would not, therefore, wish to restrict the number of times a pension arrangement or shareable state scheme rights are capable of being shared in relation to different marriages.

Amendments Nos. 58E and 58G seek to remove the words "in relation to the marriage" from various provisions in the Bill. These words are included in the Bill to prevent a spouse or former spouse from obtaining more than one share of the member's pension arrangements or state scheme rights. But we do not want to prevent a subsequent spouse from being able to share the member's pension arrangement, for the reasons I have given.

Amendments Nos. 59 and 60 seek to limit the power of the court in connection with earmarking orders relating to lump sums. Under the amendments, the power of the court to make such an order would not be exercisable if the pension arrangement in question were subject to a pension-sharing order or had already been the subject of a pension-sharing order or agreement. The amendments presumably seek to protect the value of the member spouse's pension fund. If adopted, they would, in the Government's view, unreasonably limit the options available to the court to assist a subsequent spouse.

The amendments would remove a flexibility that we consider necessary. It will not be used in all cases and I have no doubt that the courts will consider carefully the sort of circumstances that noble Lords have raised. That is why the courts are explicitly required under existing matrimonial law to have regard to all the circumstances of the case, including income, earning capacity, property and other resources that each of the

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parties is likely to have in the foreseeable future. The amendments would unreasonably restrict the capacity of the courts and the couple to make the most appropriate financial arrangements, and I hope, therefore, that the noble Lord will seek to withdraw his amendment.

Lord Astor of Hever: I am grateful to the Minister for that detailed explanation of why the Government will not accept the amendment. The noble Lord, Lord Goodhart, made two points. The first was that he would find it difficult to support the amendment because of the anomalies, and I accept that that is a good point. Secondly, he suggested that the courts should be the body to take into account the amount of earnings while the spouses were living together.

I accept that pensions on subsequent marriages could be a valuable asset, as the Minister has just said, but in most instances we feel that that will not be the case.

Baroness Hollis of Heigham: I do not normally seek to intervene in the noble Lord's speeches, but I wish to point out that the average age for divorce is early 30s. A subsequent marriage could last a long time and that is the point I was trying to make. It is often the second marriage that has jointly invested in the pension that is in the husband's name.

Lord Astor of Hever: I understand that, but it was my understanding that despite Oscar Wilde's description of second marriage as a triumph of hope over experience, second marriages tend to last less long than first marriages. Our feeling is that one cannot split a crumb and pensions were never designed to be split. We also feel that the second or third spouse knows the score when she marries. In my case, my second wife knew exactly what she was taking on, for better or for worse.

I am sorry that the Minister is not more sympathetic to our amendments. We will read Hansard carefully, but in the meantime I beg leave to withdraw the amendment.

Amendment No. 58D, as an amendment to Amendment No. 58, by leave, withdrawn.

[Amendments Nos. 58E to 58H, as amendments to Amendment No. 58, not moved.]

Lord Astor of Hever moved, as an amendment to Amendment No. 58, Amendment No. 58J:

Line 60, at end insert--
("( ) No pension sharing order shall be made which is materially contrary to the interests of any child of the family.")

The noble Lord said: The amendment is designed to probe the Government's intentions and their commitment to the interests of children from first or subsequent marriages. Those interests appear to have been wholly ignored and excluded from the provisions of pension-sharing arrangements. It is essential that the courts, before they decide whether there should be pension sharing or a pension split, should consider whether that would disadvantage any child.

There can be no doubt that divorce is an exceptionally traumatic experience for all concerned. That is most true for children. Individuals who are normally reasonable and rational can, on divorce, become the antithesis.

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The intention is not to add another complicated dimension to protracted legal negotiations but to ensure that there is a fundamental commitment to the interests of children; that is, that no pension-sharing order may be made that is materially contrary to their financial well-being.

We accept that the protection of children's interests on divorce is not primarily accounted for by pension legislation but rather by divorce legislation. The Under-Secretary of State in the other place made it clear that the Matrimonial Causes Act 1973 states that the first consideration will be given to the welfare of a child of the family who is under the age of 18. Lawyers could argue that, in relation to pension sharing, the Bill as it stands contains no reference to children and so there is no reason why they should be taken into account in a pension-sharing order. No legal instrument currently exists in pension sharing to protect the interests of children.

The amendment would compel the financial arrangement to be made with full recognition of the present and future circumstances of the child, to avoid potential conflicts. It is vital, as a matter of principle, that children are explicitly recognised in pension sharing, given the potential for a substantial change in the allocation of capital and revenues within the family. Furthermore, there is a growing tendency towards serial marriages, and therefore, an increase in the number of children who are likely to be directly affected by the fact that one parent's source of income is a pension. Do the Government, therefore, intend to make it possible for the courts to make pension-sharing orders that take full account of the interests of children? The Law Society has specifically asked me to seek clarification on this point.

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