|Pension Annuities (Amendment) Bill
Ruth Kelly: The hon. Gentleman makes some valid and interesting points. The hon. Lady pointed out the difficulties of Brethren employers as well as employees. Clearly, there are difficulties with the current system, under which funds must be invested in an annuity product. The Bill, and the Government's amendments to it, were not aimed at addressing that problem, and it is difficult to do so from within the confines of the Bill.
As I read the Income and Corporation Taxes Act 1988, the requirement to purchase an annuity at 65 would not just leave unaffected the issue of stakeholder pensions but would actually worsen matters for those involved. That is a genuine problem that must be resolved, but the amendment will not solve it.
Column Number: 17However, I am not unsympathetic and unwilling to consider these points. In fact, I have heard representations from the Brethren. I shall consider the matter in light of the consultation, and I look forward to exploring the issues with them when the consultation period is concluded.
Mr. Field: It is clear that not all the questions that the Minister raised can be answered by amendments Nos. 1 to 5. However, if she would like to advertise her surgeries to the Brethren, I am sure that they will come in abundance to clear up those difficulties.
There are some technical issues that are small at the moment, such as how the scheme would work for people who live beyond 100. If the amendments under discussion were accepted, there would be two models in the Bill for how to get round the annuities issue. At some stage my right hon. Friend the Member for Skipton and Ripon will have to consider whether he wants to drop most of his clauses and keep these small amendments. If he were to consider that as a route for getting a reform through the House of Commons, would the Minister advocate these amendments or a big Bill?
Ruth Kelly: My right hon. Friend has perhaps deduced why I do not advertise my advice surgeries to the general public, although of course I have them regularly. The technical flaws in the Bill and the amendment run parallel. Some of the issues that I have highlighted in relation to the amendment, such as the ability to secure a minimum retirement income through setting up a retirement income fund, failsafe fund or however one chooses to describe it, are similar. It is a difficult concept. We do not agree on the methods through which reform would be achieved, and neither the amendments nor the Bill provide a vehicle for dealing with those issues. However, there are issues that we must examine, and I hope to have fruitful negotiations about them in future.
Mr. Curry: I have a couple of general observations on the Minister's remarks. Amendments tabled not by the Government are almost always technically flawed. If the Government are willing to accept the spirit of what Members are trying to do, they usually agree that if the amendments are withdrawn, they will introduce technically correct versions on Report. We cannot proceed on the basis of simply saying that amendments are technically wrong. The Government get millions of things wrong in Bills, and most amendments made in Committee are introduced by them.
Ruth Kelly: I thought that I had made the point clearly that although some of the issues in the amendment are technical, my argument has parallels throughout the Bill. It mirrors arguments that we have with the entire content of the Bill, which suggests that the argument is not purely a technical one on drafting, but applies specifically to the character of the amendment.
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Mr. Curry: The Minister began her remarks by saying that the amendments were technically flawed. If her real objection is that she does not like the amendments, we can skip the bit about the technical flaws and get to the substance.
I hope that the Committee will not be dominated by the suggestion that because only certain people can benefit from things, they are wrong. We are beginning to see elements of that already. It is interesting to read the Government's consultation documentthe mouse that did not roarand find innovations that are specifically described as having value only to those with larger funds. We may find ourselves debating different people who can benefit from the proposals.
Ruth Kelly: If I criticised proposals merely because they benefited only a few people, the right hon. Gentleman would be correct in attacking that position. He would be right not to agree with it, because I would not agree with it either. The principle that underlies our approach to annuity reform is that any benefits and reforms should not disadvantage the majority of people while benefiting a few.
The Chairman: Order. The Minister's intervention is lengthy, and I remind the Committee that there are two issues. One concerns the issues in the amendments that we are discussing; the other is the general principle of possible reform to the annuity regime. I suspect that if we go too far down the latter road, we will not make much progress on the former, which is the purpose of our deliberations.
Mr. Curry: What the Minister said is all very well, but it is sometimes difficult to define whether people are disadvantaged or not. In subsequent amendments the Minister will seek to reinstate draw-down, even though the consultation paper states that draw-down is pretty iffy. By reducing the pool of money that goes into an annuity, draw-down dilutes the pooling of the risk, which damages people who do not have the option of larger-sized funds. We must be more careful.
On the Plymouth Brethren, I am intrigued to know where the Minister holds her surgeries. I did not know that she did not advertise them. I obviously need to take advice on that. She seems to have got into a wheeze that I wish I had thought of a long time ago.
Ruth Kelly: Only to the general public.
Mr. Curry: I thought that my constituents were members of the general public. I may be curiously
The Chairman: Order. We are doing fine so far, but I need help to continue to make progress. I am yet to understand how Members' advice surgeries are relevant to the amendments.
Mr. Curry: I will eliminate my proposed reference to Jehovah's Witnesses.
I understand the concerns of the Plymouth Brethren in that being obliged to buy annuity is taking a gamble onor making an assumption aboutlife expectancy, which only God should take. That is the heart of the argument. My hon. Friend the Member
Column Number: 19for Arundel and South Downs (Mr. Flight) wants to substitute a mechanism that would deliver the equivalentin his view, perhaps greatersecurity of the annuities route.
I resisted great temptation in deciding that the Bill should start by accepting the Government's proposition that, where funds have been accumulated through tax concessions, it is incumbent on the person who has made the accumulation to make security for their old age rather than fall back on welfare. Annuities therefore form a central part of my Bill.
Previous Bills would not have removed the obligation to buy annuities: they gave complete discretion. We decided not to go down that route, but sought to define a role for annuitiesthe welfare-protecting element of the Bill. I do not want to depart from the central principle, which is to seek common ground with the Government on that. The area of disagreement lies in deciding what happens to funds ''surplus'' to the requirement to buy benefit.
The amendment would clearly breach the central principle. My hon. Friend would stress the specific purpose, which arises because a group of people with religious convictions feel that they cannot go down the route prescribed by the Minister and myself. I remain concerned about an 80-year threshold. One of the options was to increase the 75-year limit. I agree with the consultation paper in rejecting the raising of thresholds. I have gone in the opposite direction. I trust that my hon. Friend envisages his mechanism as having specific application to people with a particular concern, or is it capable of leaking into a general application that would undermine the principles of my Bill? He may be testing the Minister's response.
Mr. Flight: As the amendment standsand, indeed, in principleit is impracticable to legislate for a particular religious allegiance. As the right hon. Member for Birkenhead (Mr. Field) said, the failsafe fund, which the amendments represent, would in principle be available to anyone wishing to take that route. Most people would deem it unattractive, however, because of the 150 per cent. requirement in respect of the failsafe annuity and the low-risk investment area. The annuity that is proposed in the Bill is likely to be deemed more attractive, but the two cannot be separated in principle.
The Chairman: The response was shorter than the intervention.
Mrs. Browning: The Minister admitted that she is opposed to this group of amendments on substantive as well as technical grounds. I am disappointed about that. With regard to the Bill, she has consistently championed the principle of flexibility: it was one of the first words that she uttered in her response on Second Reading, and it is frequently employed in the Government's ''Modernising Annuities'' consultation paper. However, although these amendments provide
Column Number: 20her with an opportunity to be flexible, she is resisting them for substantive reasons. I wish to press the amendment to a Division.
Question put, That the amendment be made:
The Committee divided: Ayes 5, Noes 4.
Division No. 1]
Ruth Kelly: I beg to move amendment No. 7, in page 1, leave out lines 11 to 14.
The Chairman: With this we may consider amendment No. 14, in page 2, leave out lines 18 to 20.
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