Sir George Young was in the House of Commons on Friday to support a Private Member’s Bill to reform the law on pensions and annuities.
“Over recent years, more and more of my constituents between 65 and 75 years of age have written in expressing their anger that they have to purchase an annuity with all but 25% of the funds in their pension scheme. Because annuity rates have fallen, pensioners are now finding that their standard of living can full sharply after they buy the annuity."
David Curry MP won fifth place in the Private Member’s Bill ballot and introduced legislation that would reform the compulsory annuity purchase rules for certain types of private pensions.
“I listened to the debate on Friday and supported the Bill which got a second reading. However, having listened to the Minister, it is clear that the Government plans to block the Bill later.”
The Bill introduces provisions based on proposals published in March 2000 by the Retirement Income Working Party, a group made up of academics and industry representatives. These would limit the requirement to purchase an annuity to an amount that would give the annuitant a minimum retirement income. It would provide for greater flexibility over the application of any residual fund once the minimum retirement income had been met
“I fought the last election on a manifesto pledge to ‘abolish the rule which currently forces pensioners to buy an annuity when they reach 75. People with personal pensions will only need to ensure that they have sufficient income to keep free of means-tested benefits. The remaining capital in the pension fund will be theirs to keep and - if they wish - to pass on to their children’.
“That is precisely what David Curry’s bill will do. Frankly it is a scandal that the government has not brought forward its own proposals by now - they claim to care about pensioners and then effectively reject a measure of crucial importance to the welfare of thousands that would cost the Treasury nothing.”