Annuity defeat for Pensions Bill in Lords
The Nanny State got a bloody nose in the Lords debate on the Pensions Bill last night when an amendment tabled by Lord Higgins to stop the forced annuitisation of pension savings at age 75 was carried by a thumping 198 votes to 144. To say I’m delighted would be an understatement, but to be realistic about things the stacked deck in the Commons will almost certainly undo the amendment over the next day or two as the Pensions Act finally takes shape. That doesn’t matter though. What’s important is that this issue of us being forced to buy an annuity at a completely arbitrary age now takes centre stage in the public debate on pensions that will start afresh next year when the Pensions Commission publishes its final report.
Lord Higgins, who is Shadow Minister for Pensions in the Lords, tabled the amendment to remove the compulsion to buy annuities and to let people use their pension savings as they choose – providing they have sufficient income in retirement to avoid becoming dependent on means-tested benefits. That’s almost word for word what we have been saying for some time now. In fact this vote led me to look up our lobbying papers from April 2002 where we said:
“Scottish Life does not agree that all people with approved pension savings should be required to purchase an annuity during their retirement. In our view the question of whether or not to annuitise, particularly late in life, should be a matter for each individual to decide upon for themselves in the light of their own financial circumstances and requirements. We do not agree that the arbitrary age of 75 by when people are obliged to annuitise should stand, nor that it should be replaced by any other similarly arbitrary age.
We would argue that the rules that apply to all who defer their pensions up to age 75 should apply to those who choose to do so beyond the age of 75 as well. In our opinion, genuine self-insurers should not be obliged by law to become cautious investors at some arbitrary point in later life.
In this context we would agree that Government should expect that all those with pension savings who can afford to do so should annuitise up to the level of the Minimum Income Guarantee (MIG) and that this should apply even to those who want to be self-insurers.”
If you’d like to read the full text of that lobbying document you can find it on the ‘Political Papers’ section of the BeeHive, or just jump through hyperspace to read it by following this link Scottish Life's views on the requirement for all to annuitise by age 75. Is technology wonderful or what? Reading those words again two and half years after I wrote them made me reflect a bit on the issue and I don’t think I’d change one word of that document if I were writing it for the first time now. I’m pretty pleased with it on re-reading it in fact. It’s what we believed in then and exactly what we continue to believe in today and perhaps the time has finally come for this idea?
David Willetts, the Conservative Shadow Pensions Secretary, said this morning that he was “delighted we have defeated the Government in the Lords and I hope they will now listen to us and the many pensioners who believe we must get rid of the annuity rule once and for all.” That may be a bit too much to expect right now, but the age-75 rule is clearly on the ropes and doesn’t look like making the whole twelve rounds to me.
As usual, the quality of the debate in the Lords on this topic was as good as ever and I’ve added the links to the bits of the Hansard coverage of the proceedings below for anyone who’d like to see the blow-by-blow action leading up to last night’s vote. The debate on the age 75 stuff (which is called Amendment 65) can be accessed by following this link:
Real die-hard pension addicts, though, might like to read all of the debate including some interesting stuff on the Pension Protection Fund (PPF) and can get in at the start of the proceedings by following this link:
I mean, is it me or is this week getting better and better pension-wise?
16 November 2004
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