Pensions Bill

My Lords, I for one find this a curious amendment, as the noble Lord, Lord Oakeshott, knows because we discussed it last week or possibly the week before. It is clearly well intentioned, because it is certainly in pensioners’ best interests to get value for money when annuitising their pension pots. However, the 400,000 that he just mentioned presumably includes those people whose pension schemes pay out in the form of an annuity immediately after they retire. That is the whole predication of a particular pension scheme. Any generic advice that they received would of course encourage shopping around, not least because a quick reference to ““annuities”” on Google will tell you that competition is alive and well in the annuities market. However, it is not always the consumer who has to do the shopping around. It might well be the pension scheme that they signed up to while they were in employment. Going back to competition, when I looked last week, I found that a man of 65 with a 65 year-old wife and a pension pot of £100,000 could receive a joint-life annuity from one provider of almost £100 a year higher than from another. The difference was even more stark when a compulsory annuity had to be taken by the age of 75; on exactly the same basis, the difference was just over £232. The curious element comes in lines 3 and 4 of the amendment. The form of consent is to be signed to ensure that the purchaser of the annuity is fully aware of the options available to provide even better value for money than the rates to which I have just referred. Thanks to the Minister’s comments on the earlier annuities amendments, the little list in the amendment should clearly include ASPs. One must ask whether having signed this form is likely to affect a person’s attitude to life. For example, it is unlikely that someone aged 65 with a £100,000 pension pot will take up smoking to get the extra £1,300 a year that is available. What about the ex-smoker? Would he go back to smoking? He might well. Much more likely would be a person moving his residence to a less healthy part of the country; the noble Lord, Lord Oakeshott, mentioned Glasgow and Bearsden, just next door to each other. That is a possibility. However, is moving from leafy Surrey up to Glasgow really likely? Of course, I accept that there is a postcode lottery in annuity rates, as exists in many other walks of life. However, is it right that such a thing is rammed down people’s throats? The same applies in the other direction. Inflation protection and dependence benefits go to reduce an annuity, although they may well be sensible for some people and not for others. Then, of course, there is the confusion aspect that the noble Lord, Lord Oakeshott, is so keen on. Just knowing their effects, the pensioner may well have to weigh up the relationship between several of the specified items in the six paragraphs, which are the minimum a pensioner must sign to having been informed about at the point at which he takes his annuity. How does someone in ill health or a smoker—which are likely to be plus factors—balance these with a possible decision as to whether he also wants inflation proofing and/or dependence benefits? Even worse, if such a list changes the annuity rates across the board, as it well might, who is the gainer? I doubt that it will be the pensioner, especially one who delays taking his annuity until the last possible moment. Lastly, is the Financial Services Authority the right organisation to maintain and update the noble Lord’s form of consent? I would not have thought that it was the FSA’s job. I am not even sure that it should come within the Pensions Regulator’s remit, but perhaps the Minister has some ideas on this.