HL Deb 11 January 1996 vol 568 cc34-5WA
Baroness Hollis of Heigham

asked Her Majesty's Government:

  1. (a) what the estimated cost to the unfunded public service pension schemes would be if pensions could be split after divorce;
  2. (b) which schemes are involved;
  3. (c) how this figure has been calculated, including the assumptions made; and
  4. (d) how this cost would be distributed on a yearly basis up to 2020.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)

The effects on the costs for unfunded public service schemes would depend on the specific arrangements for splitting pensions on divorce. If pensions were split with the non-member taking a transfer value, this would bring forward benefit and PSBR costs (see also below). The main schemes affected are those covering the NHS, teachers, civil servants, the armed forces and police and fire services, but a number of smaller schemes are also affected.

The broad estimates below, produced by the Government Actuary's Department, assume splitting of accrued pension rights equally in all new divorce cases involving current (but not former) employees who are members of these schemes. They also assume divorce rates by age derived from information for the three years 1991 to 1993. The sums brought forward could add up to £½ billion annually to scheme benefit and PSBR costs in the early years gradually reducing to something less than £50 million by 2020 (at constant prices).