Pensions Bill

My Lords, this has been an interesting debate. I will start by comforting noble Lords with the fact that the Government do not feel that they need a way out of this issue. I very much agree with the noble Lord, Lord Oakeshott, that the debate has been around 75 or some other date. It has not focused on issues of temporary suspension. That is a significant issue. Stakeholders out there in the pensions community are not enamoured of this suggestion either. As the noble Lord, Lord Fowler, said, we face a global financial crisis that is imposing lots of challenges. The noble Lord, Lord Forsyth, said that we should be doing everything that we can to encourage people to save and I very much agree with that. That is why the Government have taken action to produce stability in the banking system through the measures that the Prime Minister and the Chancellor have announced. That is why the measure that is before us today in this House—and has been for several weeks—is about automatic enrolment into pension schemes to encourage further saving. That is why the Government introduced the PPF to protect people who might have lost their savings and, after some challenging debates, have dealt with VAs to protect people who lost their pension savings. That is why we strengthened the role of the Pensions Regulator, which we will come on to later. We have been encouraging people to save in this environment. The amendment would allow suspension of requirements to buy an annuity by the age of 75. I will take this opportunity to clarify that there are no such requirements on the statute book. The noble Lord, Lord Crickhowell, hit the nail on the head with understanding what the regime says. The requirement is to have started to draw an income—either through an annuity, a pension scheme or, since 2006, an alternatively secured pension. There is nothing that says you have to annuitise by the age of 75. That is an important distinction and I want to reiterate that: nobody is forced to buy an annuity with their pension savings. Indeed, my noble friend Lady Hollis advanced the proposition, as she has before, that people should be able to take a modest income out of their pension pot and withdraw tax savings, and then the rest has nothing to do with government policy. In essence, that is exactly what alternatively secured pensions achieve. Under an ASP, you are required to take between 55 per cent and 90 per cent of the annuity value of the pension pot. If there is anything left at the end of the day not taken as an income it has a tax exit charge. That is exactly the proposition advanced by my noble friend.