Pensions Bill

moved Amendment No. 69A: 69A: After Clause 98, insert the following new Clause— ““Suspension of annuitisation order (1) The Secretary of State may by order suspend any statutory provision or rule of law requiring a pension to be taken in the form of an annuity. (2) The Secretary of State may by order renew an order made under subsection (1). (3) The period for which a suspension order, made under subsection (1) or (2), has effect must be stated in the order and may not be less than 6 months or more than 2 years. (4) Any order made under subsection (1) or (2) does not have effect until a draft has been laid before, and approved by a resolution of each House of Parliament.”” The noble Lord said: My Lords, the new clause is designed to meet a particular and urgent need. As the House knows, the present rules on annuities require people who have personal, defined contribution pensions to buy an annuity at age 75. The difficulty is that people are being required to do this in the midst of disastrously falling markets, with the effect that their savings—their pot of money—have been radically reduced, and the annuity that they can buy has been reduced with that. The Minister knows my view that compulsory annuities should be abolished altogether. That was the view of your Lordships when we debated an amendment tabled by my noble friend Lord Hunt of Wirral last June. My noble friend now has Front-Bench duties, shadowing the noble Lord, Lord Mandelson, but I know that that remains his view. I emphasise that the proposed new clause is not an abolition clause; nor is it an attempt to increase to 80 or 85 the age at which an annuity can be taken—a later amendment deals with that, but that is not the proposition here. The purpose of this new clause is to give the Government the power to suspend the rule that an annuity must be taken at the age of 75. It is as straightforward as that in its intent. If there are imperfections in the drafting I apologise, and I am not over the moon about the description ““annuitisation order””. But I hope that the Minister will respond not on the technicalities but on the principle of bringing help to those men and women who need it now. At the heart of the proposal is the scale of the present financial crisis. We do not need to look very far to find evidence. The Chancellor of the Exchequer referred to it as the worst crisis for 60 years. The deputy governor of the Bank of England, Charlie Bean, was even more explicit. Last week, he said: "““This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history””." In terms of the impact on the real economy we are still in early days. I should add that this was reported first in the Scarborough Evening News, which shows that even today with the internet and 24-hour television, regional newspapers still manage to get their scoops. It was a remarkably frank and important statement. Stock markets around the world have crashed and the value of pension investments has radically reduced. The FTSE and Dow Jones have seen massive falls; the Nikkei is now down to its lowest position for a quarter of a century. The impact on savers trying to build up a pension has been little short of catastrophic. On average the value of defined contribution pensions has reduced by about a third. Everyone has been hit; but most of all those who are in their 70s. At this point, I should declare an interest. I am 70. I am not sure whether that causes surprise to noble Lords who thought I was much younger or much older. I am relatively fortunate as I have five years to make up the losses in my pension if, as we hope, the markets eventually recover. However, consider the position of a man or woman now aged 74 or 73. They have no time to make up their losses, but as the law stands they will be forced to take an annuity. The time axe will come down on them and they will be forced to buy an annuity with a radically reduced fund. Having bought it, it is likely to be a permanent diminution in their retirement income. That is why I want there to be the power to suspend the compulsory annuity rule. How long that rule remains suspended is a matter for the Government—or any Government who may succeed them. To be fair, the Government have shown in a number of comments from Ministers—not least those of the Leader of the House of Commons—that they are aware of the difficulties and the need for action. We now want those expressions of sympathy converted into action. The only half-argument that I have heard against such a change is that the rule affects only a small number of people. I do not regard that as an argument for inaction. Injustice is still injustice, however small the number affected. There are two additional points. First, we have already legislated to exclude the Christian Brethren, the Plymouth Brethren, who have a principled objection to the pooling of risk of mortality. I understand that that exclusion affects fewer than 1,000 people. Secondly, and more crucially, it is important for pensions policy generally that we—all parties—want to encourage as many people as possible to make provision through saving for their pensions. Presumably, that is common ground around the House. The sight of the compulsory annuity rule being enforced in the present financial crisis would damage all our efforts. It would be hardly surprising if people said, ““What is the point of saving if at the end of the road we are forced to take the kind of loss that so many people are facing at the moment?”” This is a question of justice for the men and women who have saved for their future but have been caught in a financial storm that they had no way of influencing and very little chance of avoiding. We have the opportunity of avoiding that injustice this afternoon. I hope that it is an opportunity that the Government will take. I beg to move.