Pensions Bill

I feel a considerable sense of déjà vu in this debate. The compulsory taking of annuities was the key issue at the end of our consideration of the previous Pensions Bill in 2004, which the noble Lord, Lord Skelmersdale and I both remember well. We had repeated ping-pong, and eventually our joint amendment to increase the age for compulsory annuitisation, which ended up being 80, was lost by a small majority. Our approach to the Bill is to see whether we can practically improve the situation for people who are compelled to buy annuities. We heard movingly from the noble Lord, Lord Hunt, the appeals to property, liberty and so on. They will not cut any ice with the Government, obviously, but in practice the points can be argued either way. He helpfully—and I was going to make this point—quoted my honourable friend David Laws, who went on to say that the problem, "““is largely built on the fact that we have a low basic state pension and a great deal of means-testing; therefore, the Government have stuck with these rules over time to try and protect the taxpayer interest. We understand the Government’s concerns about compulsory annuitisation, but it is … part of the price that we pay for having a low foundation””.—[Official Report, Commons Pensions Bill Public Bill Committee, 8/2/07; col. 392.]" The top priority for us on these Benches is to improve the basic state pension as fast as possible and to get away from means-testing, which will reduce the problem. We and the Conservatives argued strongly and clearly last time that, even if one accepts the Government’s argument that there should be some protection—and I think that there is a case for it—it makes no sense to have the age of compulsory annuitisation frozen in aspic at 75. That is the practical point where we can move. I remember meeting the Minister at the other end at the time, Malcolm Wicks, with my colleague Steve Webb, and having a discussion during which, as he later did publicly, the Minister gave an undertaking that the whole question of compulsory annuitisation would be revisited after the Turner commission reported. The commission reported, but if there was a review we heard nothing about it, and there has been no change in the Government’s position. I am bound to say that I feel fairly let down by that process, and I shall focus on holding the Government to account in our consideration of the Bill and forcing them at least to explain why their position makes sense when life expectancy is rising so fast. If it was right to take the decision back in the late 1970s to fix the age at 75, how can it possibly be right to maintain that position indefinitely? At the time of the previous Bill, I had quite a discussion with the noble Baroness, Lady Hollis, then the Minister, about how fast life expectancy was increasing. At that time, it seemed common ground that life expectancy had increased by about six and a half years since the age of compulsory annuitisation was fixed at 75. It is now three years later and that figure has now risen to eight years, so the age of compulsory annuitisation would be 83 if one were to put it on the same basis as before. Our amendment suggests 85, but we are reasonable people and are putting that age forward as an initial shot. We would like to hear the Government’s response on what a realistic figure would be, given that I thought that, in many ways, they accepted the principle of movement under pressure at the time of the previous Bill. Our other problem with the Conservative proposals is that they are complicated. If there is political consensus in this country on pensions, it is that we want simplicity. Nothing could be simpler than to discuss and agree the age, whether 80, 82 or 85, to which the age of compulsory annuitisation should be increased. Everyone knows where they stand. I am afraid to say that when one looks through all the amendments on RIF tabled in the Commons and the Lords, the Conservative Opposition’s way is more complicated. It is unrealistic to think that there is any chance of what they propose happening and it is complicated at a time when we all want simplicity. I shall not quote the people who are giving views too much, except to say that the Association of British Insurers is calling for a straightforward increase. Let us be practical and put something forward in this House that tries to achieve a realistic way forward rather than something that tries to change the principle on which the Government work, which I do not think that they will change. Let us put something in that is based on the evidence of the change in life expectancy since the rules were last fixed, which is what we asked for in the previous Bill.