Pensions Bill

My name is attached to the amendment because my noble friend Lord Hunt is absolutely spot on. For several years now the position of the Conservative Party has been to abolish the obligation—like my noble friend, I highlight the fact that it is the ““obligation”” and not the ““right””—to take an annuity at the age of 75. Nothing has changed in our determination and it remains our policy today. Clearly it would be quite wrong for people to spend all their pension pot before they reached 75, or, indeed, before they died, and we propose the alternative of a retirement income fund so that they will not be able to depend on state benefits. As my noble friend said, the guts of this are to be found in Amendments Nos. 66 and 67. The retirement income fund has been criticised outside this Chamber for being far too complicated, but I do not believe that it is. I remind the Committee that a non-statutory fund can already be built up by way of independent savings accounts. Many people have these ISAs and the tax regime, though very different, is broadly similar in effect. ISAs can be spent tax free at any point. However, once they are spent, the previous owner may still be eligible for state benefits—pension credit, for example. The conditions attached to the retirement income fund avoid this. The soon-to-be-former Chancellor has been both obstinate and quirky on this issue: obstinate, because to start with he would brook no argument on annuities; quirky, because he suddenly produced a new pension product, the alternatively secured pension, as a result of lobbying by the Plymouth Brethren, who persuaded him that taking an annuity was a form of gambling, which is anathema to their brand of religion. Although this pension was intended only for them, it was inevitable that pensions consultants would seek to use it to cover other people. So successfully did they do this that he had to rein in the alternatively secured pension in a subsequent Budget. Even so, there is an obvious chink in the Chancellor’s armour, which should now be broken cleanly and not only for the few. The Government like to give the impression that this set of amendments is only for the few. That is not so. The Bill is the precursor of the plan of the noble Lord, Lord Turner, for personal pensions, which we will be discussing later today. It will take 50 or more years to builda complete pension pot. Page 7 of the Pensions Commission’s report reveals its belief that: "““On reasonable assumptions about rates of return and years of contribution this might secure the median earner a pension at the point of retirement of about 15% of median earnings””." The White Paper says a very helpful thing at paragraph 5.21: "““For those who do not make an annuity decision by the age of 75, it will be necessary for annuities to be purchased on behalf of individuals””." How much better it would be for the retiree to be able to pick his own annuity date. So long as he remains on total income above the pension credit level, no one can complain. Why, so long as people do not end up on state benefits, should they not be allowed to draw down their pension as and when they need it? The same rules should apply to everyone, as do those that apply now—those that we are determined to abolish.