The Lords goes for an early division

ONE CHEER for the blow struck in the House of Lords last week for a pensions "clean break" for divorcing couples.

Trouble is, it's still a long way from law. And it's just one of many examples where laws and the world of finance have a lot of catching up to do with modern relationships and lifestyles.

The Lords voted for a Labour proposal to split pension assets at the point of divorce, rather than waiting for the retirement of the partner with the pension. The new move would stand to mean fewer divorcing women (particularly) facing financial hardship later in life.

Women tend to have fewer pension savings for a number of reasons ranging from not working to generally lower earnings to career breaks. And if, instead, pensions were split at retirement, there might well be difficulties for those owed part of the pension actually getting hold of it perhaps 30 years down the line. Divorced couples may no longer be in touch, while if the partner with the pension remarries and then dies, the pension-less partner may see nothing at all - with any survivor's benefit going to the new spouse.

However, the Lords vote is opposed by the Government. Even if the proposals now get through the Commons, it could be at least two years before the changes are implemented.

In the meantime there is little progress on other equally significant areas.

Cohabitees

are still disadvantaged compared with people who are married. When they split up the poorer partner has no automatic claim on the assets - pension or otherwise - of the richer. If the couple's home, for example, is in both names, then OK, but if not the other partner has to prove a financial contribution. If one partner dies, a pension scheme will pay out a survivor's pension automatically to a spouse but not to an unmarried partner. Many public schemes won't pay out at all to unmarried partners. More private sector schemes will, but the survivor will normally have to prove financial dependence and, even then, may get less than a spouse would.

Likewise, without a will to the contrary, an unmarried partner can stand to benefit less than even distant relatives.

Gay people, it should come as no surprise, face even greater problems. If you nominate a same-sex partner to receive death-in-service benefits offered by your employer, that nomination might well be overruled by the trustees of some schemes.