Divorce, Dissolution and Separation Bill [HL]

Baroness Janke Excerpts

2nd reading & 2nd reading (Hansard): House of Lords & 2nd reading (Hansard)
Wednesday 5th February 2020 Lords Chamber

[Baroness Janke (LD)]

My Lords, I too congratulate the noble Baroness, Lady Hunt, on the clarity and eloquence of her maiden speech, and I welcome her to the House.

In this debate, I wish to raise the issue of pensions in relation to divorce. There is a significant pensions gender gap. The average pension pot of a woman aged 65 is one-fifth that of a 65 year-old man’s, and over 20 years, women receive £29,000 less in state pension than men. This deficit is set to continue, with all else being equal, closing by only 3% by 2060. Women are often most acutely disadvantaged by divorce. Therefore, I believe that pension-sharing should routinely be considered in divorce cases.

The ABI points out that of 369 court files studied, 80% revealed at least one relevant pension, yet only 14% contained a pension-sharing order. Silver splitters—people divorcing in their 50s—is the largest increasing trend in divorcing couples. Women at this point are at particular risk, as they do not have many working years left to build up an independent savings pot or pension. They are also more likely to live with the children.

I suggest that the following issues need consideration under the Bill. The lack of awareness or understanding of pensions among divorcing couples is consistently an issue; this knowledge gap extends to family lawyers and judges and means that the lack of inclusion of pension assets is not being considered when the judge is granting a settlement. Pension schemes are not obliged to allow an ex-spouse to join in their own right, with their pension share on divorce. Furthermore, for defined benefit transfers, pension trustees are not obliged to obtain consent from the partner to a pension-sharing order before transferring a defined benefit pension. Therefore, wives are at risk if ex-husbands take the money out without informing them.

Costs of an expert valuation can be prohibitive and put people off including pensions in divorce proceedings, leaving ex-spouses exposed to making decisions regarding which route is best for them and what to do with their pension share without advice. There is no standard practice for calculating pension valuations, and historical wide variances between expert pension report valuations, depending on the basis used for the calculations, has led to mistrust in the system and the potential for ex-spouses to miss out.

Timing and delays in obtaining relevant information for the expert reports from trustees and pension providers cause significant issues for solicitors, leading many to abandon considering pensions as part of the settlement. Pensions are a joint asset, so pension sharing is a clean break for all parties, setting out how much the ex-spouses will receive, and giving each spouse their own pension pot to manage as they wish. Future pension payments are not affected by the death or remarriage of either spouse, and the awardee can take a pension from the age of 55, rather than waiting until their ex-spouse retires. Making pension sharing the default option on divorce will provide both parties with retirement savings and help to ease the pensions gender gap.

Consideration of pension rights is consistent with other measures in the Bill, such as the joint approach, the removal of blame and the seeking of fairness. I hope that these issues will be fully considered in the passage of the Bill, including measures to address the injustice of the pension gender gap, which affects such large numbers of women in later life.