Pension Sharing (Hansard, 5 June 1997)

§ Ms Harman

We will introduce pension sharing for divorcing couples. This is an important step towards meeting the Government's objectives of improving the income of women in retirement.

It is the combination of the Basic State Pension and a decent second pension which prevents people from retiring into poverty. But women are less likely than men to have a good second pension.

Women are less likely than men to belong to an occupational pension scheme—in 1991 only 3.9 million women belonged to an occupational pension scheme, compared with 6.8 million men.

Women's occupational pensions are worth less on average than men's: women aged 65–69 have an average income from occupational pensions of just £22 a week, compared with £67 a week for men.

Women are less likely to have a personal pension: only 22 per cent. of women who work full-time have a personal pension, compared with 28 per cent. of men.

As a result, women are more likely than men to be poor in retirement:

Seventy per cent. of the 2 million people over the age of 60 who depend on Income Support are women.

Around three-quarters of the 1 million pensioners who do not claim the Income Support to which they are entitled—and who lose on average £14 a week—are women.

Women are less likely to have a good second pension because they are more likely to be in part-time or low-paid work, and they are more likely to interrupt their working lives to care for their families.

Women make a vital contribution to the family income by bringing up children or caring for an elderly relative. On divorce, this contribution must be recognised, and where appropriate, pension rights shared.

It is not currently possible to share pension rights between men and women. Under the current arrangements, maintenance payments can be made from one spouse to another—we expect usually from husband to wife—once the pension is in payment. But these payments can stop on the death of the pension scheme member, and a former spouse who re-marries could lose their share of the pension. In addition, these arrangements mean that a financial break between the spouses is not achieved; ties between them remain throughout their retirement.

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Our proposals will lead to fairer treatment of pensions in financial settlements between divorcing couples and will provide a better and more secure income in retirement for those receiving a share of pension rights.

We will be working in partnership with the pensions industry, family lawyers and others to deliver pension sharing arrangements by April 2000. In order to do this, we will be producing a draft Bill in this session for consultation with interested parties, before we introduce it to Parliament.

This will be the first time that my Department has adopted the approach of consulting on a draft bill, and confirms our commitment to deliver practical, workable and effective measures based on sound legislation.