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BeeHive  >  BeeLines  >  2008  >  Jul  >  Pensions: The new spectator sport…

Pensions: The new spectator sport…

Yesterday I took part in a panel session here in London at the opening of the Institute of Economic Affairs’ conference on future pensions policy.  My fellow panellists were Chris Grayling, the Conservative Shadow Secretary of State for Work and Pensions and Matthew Oakeshott, the Lib Dems peer who leads on pensions and DWP issues.  Our chairman for the debate was Malcolm Small, so the whole thing was a bit like a Pensions Radio reunion of sorts (although Matthew is yet to appear as a guest on the show – something Ms Bruun is trying to put right in the near future).

Matthew Oakeshott fitted the conference appearance in with the demanding work of debating the Pensions Bill as it passes ever so slowly through the Lords.  The debate he was involved in both yesterday and today is still continuing, but I thought BeeLiners would be interested in hearing about a number of amendments to the Bill that Lord Oakeshott and Baroness Hollis (also of Pensions Radio fame) along with Baronesses Dean and Thomas have tabled on the issues of compulsory annuitisation at age 75 and the level of Trivial Commutation allowed on pension savings.

These amendments have only been tabled for debate at this stage, but I thought I’d let you know what’s going on and later in the week we’ll let you know if any of the amendments prove to be successful (or otherwise); Ms Bruun is permanently plugged in to the proceedings via the magic of the internet age and every now and then she comes running in with gems she picks up.  It’s a bit like panning for gold dust in a mountain river really; it’s more than a bit boring, but every now and then you find a real nugget.  Let’s hope these amendments turn out to contain nuggets of gold in the next few days.  Here they are:

LORD OAKESHOTT OF SEAGROVE BAY

BARONESS THOMAS OF WINCHESTER

131

Insert the following new Clause—

"Prescribed age for compulsory annuity purchase

(1)

Within six months of the passing of this Act, the Secretary of State shall bring forward regulations to amend any statutory provision or rule of law which requires a pension to be taken in the form of an annuity by the age of 75, so that the age limit shall be fixed in accordance with subsection (2) below.

(2)

After consulting the Government Actuary's Department and the National Statistician, the age limit shall be 75 years plus the number of years by which average life expectancy has increased since the previous age limit of 75 first came into force.

(3)

The Secretary of State must review the age limit no less frequently than every five years in accordance with subsection (2), and bring forward regulations to amend the age limit if life expectancy has further changed."

132

Insert the following new Clause—

"Annuities: form of consent

A provider of a pension scheme must not sell an annuity unless the purchaser has signed a form of consent, to be prescribed and kept under review by the Financial Services Authority, so as to ensure that the purchaser is fully aware of the options available to provide best value annuities in relation to matters including, but not limited to—

(a)

ill health,

(b)

employment,

(c)

smoking,

(d)

place of residence,

(e)

inflation protection, and

(f)

any dependents' benefits after the purchaser's death."

133

Insert the following new Clause—

"Amendment of rules to take pension annuities by the age of 75

Any statutory provision or rule of law requiring a pension to be taken in the form of an annuity by the age of 75 shall be amended so that the age limit is 85."

BARONESS HOLLIS OF HEIGHAM

BARONESS DEAN OF THORNTON-LE-FYLDE

134ZB

Insert the following new Clause—

"Trivial commutation limit

(1)

The trivial commutation limit shall be raised as prescribed and shall not fall below a minimum level of £25,000.

(2)

All pension sums trivially commuted shall not be included in the assessment of capital, income or notional income for income related benefits."

Now, you don’t need me to tell you why these suggested amendments are potentially so important, the very last one there, of course, would make a substantial change to what Personal Accounts are all about and would fit in pretty well with my rambling musings in a BeeLine from last week entitled Personal Account Sales Aid.

As I said, we’ll bring you not only the result of the debate on these (and other) suggested amendments, but also the blow-by-blow account of the complete match.  Be honest, at its best this stuff is as good as live football or cricket isn’t it?  If one or two of these go in the crowd’ll go bananas!

Steve Bee

15 July 2008

Source: Lords Pensions Bill debate, Monday 14 July 2008

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