Oral question asked in the House of Lords, by Lord Davies of Oldham (Labour). It was answered on Thursday, 21 October 2010.

Pensions

Question: My Lords, is not the real problem for the foreseeable future that, with interests rates low, the returns on annuities will be well below people’s expectations? Could not the Government think more radically about this in the longer term? Could we not think of following the pattern adopted by some other European Governments on annuities, whereby people would be able to purchase government bonds at a slightly better rate of interest than obtains at present and at the same time contribute to the Government in the shorter term sums which would help the Exchequer?

Answer: My Lords, low interest rates are vital to the growth of the economy. In that context, it is important that people are able to choose between a wide variety of savings products. As well as making more flexible people’s choices about their retirement savings, the Government offer not only the opportunity to invest in gilt-edged securities but a range of products through NS&I.

Secondary information