Harman:'pension splitting' by year 2000

Harman Plans Full 'Pension Splitting'

Ms Harman is expected to make an announcement in the Commons next week paving the way for draft legislation. The new framework, which will almost certainly allow 'pension splitting', could be in place by April 2000.

The law would enable divorcees to take a share of their spouse's pension contributions at the time of divorce rather than forcing them to wait until retirement. The proposals will tend to benefit divorced women, although as female earning power increases many divorced men will also stand to benefit.

The issue of 'pension splitting' has been high on Labour's agenda since the passage of the 1995 Pensions Act.

Lord Mackay, the then Lord Chancellor, added a concession in the planned legislation as his initial proposals contained no pension-splitting provision.

Labour's propsals build on the legislation of the last Conservative government which introduced a form of pension splitting - but only once the pension was being drawn and with the additional clause that payments would stop on the death of the original pension-holder.

The Labour peer Baroness Hollis, now a Social Security Minister, pushed at the time for concessions which would enable a divorcee to have a clean break.

Under her proposals, the divorcee would be able to take a share of the pension fund built up by their former spouse upon divorce and then add investments to it over time. Ms Harman's proposal looks certain to mirror Baroness Hollis's blueprint, though extensive consultation is promised.

A final version of the Bill is not expected during this legislative session but Labour has promised to put pension-splitting onto the statute book by April 2000 so measures are likely in the next Queen's Speech.

It is a complex area with personal pensions relatively easy to split but those based on final salary and some other company schemes are often more difficult to divide during an employee's working life.

Ms Harman, who doubles up as Minister for Women as well as being Social Security Secretary, is determined to pass the proposals, which she sees as a major boost to women's rights.