Pensions plan too late for many: Proposed changes to the law will not help women who are already divorced

A PLAN to allow judges to order the splitting of pensions to ensure a fair division of spoils at divorce was set out this week.

But even if the Government accepts the scheme, which would involve altering pensions and matrimonial law, this will not help women already divorced.

The Pensions Management Institute, which drew up the plan, does not believe it should be retroactive. Professor Judith Masson, a law lecturer at Warwick University and member of the working party, said the past should not be opened up, and the clean break principle should be respected.

So any change will not improve the lot of women like Sandy Bishop, who was divorced last year.

She was married for 30 years and brought up three children. She worked throughout her marriage, but her career was always regarded as secondary to her husband's. She worked for Vogue, and ran a children's clothes company, which failed. She did not build up her own pension. She is now 54 years old and works as an interior designer and trades in antiques from her own home in London.

On divorce her husband was, she says, 'salary rich, but asset poor'. They had two properties and kept one each, so she has a mortgage-free home. She did not get a clean-break lump sum, but a maintenance award, payment of which will stop if she co-habits with anyone for longer than six months.

Sandy Bishop feels that it is as if a divorced woman is her ex- husband's chattel until she is moved on to someone else. 'She has nothing in her own right. If she wants to live with an impecunious man then she loses all. She has to remain celibate.

'This change is a very good idea. The most important point as far as I'm concerned is that women are cut out of the pension. The only money she might have is out of a lump sum or maintenance - as long as she does not co-habit in my case. I may well want to live with someone for the rest of my life. I want companionship.

'I want other women in their happy marriages to be aware that they must plan. Men do, but women don't. Women give all when they love. I'm working now, but I haven't got a pension. It's such a personal plight.'

The question of pensions and divorce is being considered by the Goode committee, which is reviewing the whole post-Maxwell pensions world. The conclusions of the Pensions Management Institute working party have been sent to the committee in the hope that a joint approach can be worked out.

The working party proposals rest in the now-established practice of working out a transfer value for people who leave a company scheme. With pensions where savings are built up as normal investments there is no problem in setting a monetary value to the fund. But it is more difficult with schemes where entitlements are built up as fractions of the final salary. However, it is now common to work out the lump sum that would be needed now to buy the promised stream of income in retirement already built up in the pension.

So on divorce the pension can be weighed in the balance alongside the matrimonial home and other assets. In Scotland some consideration is already given to the value of pensions, and typically the wife is allowed to keep the home while her husband keeps his pension. But there is no mechanism for reallocating any of the pension.

The proposed reform would allow judges to direct pension trustees to give a transfer value to the wife. She would then leave it in the scheme or transfer it to her own company or personal scheme. It would be paid out when she retired, and there would be no further connection with her ex-husband.

Only with divorces where the pension is already being paid out would there have to be a different arrangement, with a portion of the income earmarked for the wife.

The financial advisers Noble Lowndes say legislation is unlikely before 1994 or 1995, but that in the meantime those examining their finances - and those of their spouse - pending a divorce should ask their pension schemes for cash equivalents. You are entitled to ask this free of charge once a year.

(Photograph omitted)