UK Parliament / Open data

Pensions Bill

Perhaps I may add two comments. First, I support and reiterate the words of the noble Lord, Lord Blackwell, who correctly asked the Government to be clear whether they objected in principle to the amendment or simply on the basis of detail and complexity. The noble Lord, Lord Hunt, said that the Government expressed concern in another place that few people would take up that option. It is somewhat strange to use that as an argument, given that the alternative assured scheme was introduced for the 750 wonderful members ofthe Plymouth Brethren, although they are small in number. Secondly, we said in the Pensions Commission report that there is an issue regarding the total capacity of the insurance sector to write the scale of annuities for which there could be demand. As we shift from defined benefit pension schemes to defined contribution schemes, a previously implicit processof annuitisation within defined benefit schemes is becoming an overt purchase of annuities from insurance companies. There is an issue about the capital capacity of insurance companies to write the sheer scale of annuities that will be demanded. The bigger the imbalance is between demand for and supply of that capacity, the lower the annuity rates will be. There is an interest for everyone who buys an annuity in ensuring that those who do not need to buy one do not push their demand into the market and therefore decrease yields. That is a serious point. It is a benefit not simply for those who have chosen not to buy annuities but for those who buy them, as the vast majority of people will.

About this proceeding contribution

Reference

692 c1147 

Session

2006-07

Chamber / Committee

House of Lords chamber

Legislation

Pensions Bill 2006-07
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