Pensions split will reduce the traumas of divorce

Divorce must be one of the most traumatic experiences that grown men and women can go through. The recognition that a broken relationship can no longer be mended and that permanent separation must take place is not a decision lightly taken.

For many women, there is then the problem of how they will survive financially. Often, the family depended solely or mostly on a husband's income. Now they must learn new skills, re-entering the jobs marketplace for the first time in years.

To cap it all, until now there has always been the problem of adequate pension provision for women after their divorce. In the past, many women discovered too late that divorce meant penury in retirement because their husband had retained all pension rights for himself.

That is why this week's decision on pension-splitting at divorce, announced by the Government, is a good move.

Ministers had long wanted to divide pensions after a divorce. However, the way they intended to do so was silly. In effect, they wanted pension- less divorcees to lay a claim to part of their former partner's pensions, but payable only when they retired.

The problem with this approach was that it left women tied to their ex- husbands' financial coat-tails, possibly for many years.

Worse, it meant that if the husband died before retirement, the woman might receive no pension at all. It took a revolt in the Lords two years ago to force the Government to change its mind, as it finally did this week.

The problem is, however, that the Government has not said when this change will take place. It equivocated for two years, while another 360,000 couples divorced and it now looks as if it may be at least one more year - and a further 180,000 divorces - before its proposals become law, whichever party wins the general election.

Perhaps one should not expect much more than this, given that we are at the fag-end of the present administration. But there is something intensely annoying that a proposal so sensible has taken all these years to make it to the statute books. The system has let hundreds of thousands of innocent people down.

Last week we inaugurated our advice column with a review of Paula Martin's finances. Paula had problems with a hideously expensive personal pension sold to her in the late 1980s by someone from a company called Merchant Investors.

On Monday, Merchant Investors were in touch with Paula to apologise for what happened. They have promised to reinstate her into the occupational pension scheme she should have joined all that time ago.

A few years ago, the company reviewed its charges and recognised it had a problem. It discarded most of its expensive admin fees for new pensions it sells and is now one of the cheapest on the market.

But that still left people like Paula stuck on the old contracts. Significantly, the company has made a commitment to look at all policies from the same time to see if it can resolve problems any other policyholders may have. So, if you have a Merchant Investors pension dating to that period, get in touch with the company.

By the way, Paula's original salesman went off to join another company, now called Lincoln National. While there, he sold Paula another policy that may have been inappropriate. He was undoubtedly prolific and has probably given many other people the benefits of his salesmanship. Let's see if Lincoln National contacts us next week ...

This week, the advice column discusses other subjects. Dozens of you have written asking for a review. We can't promise everyone will get one, but we hope to select cases that will give all readers food for thought. Keep writing in if you want to take part.

Indeed, if there is any point you want to make, a gripe about your financial provider, a (friendly) comment about one of this section's stories, send me a letter.

Write to: Nic Cicutti, Financial Advice Offer, The Independent, 1 Canada Square, Canary Wharf, London, E14 5DL.