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Finance (No. 2) Bill

I should like to break down my remarks into two sections. The first deals with new clauses 3 and 7 and amendments Nos. 107 to 120 and the second covers amendments Nos. 62 and 14. Hon. Members will remember debates about scrapping the rules that require the compulsory purchase of annuities at 75. We are holding our first debate on the topic since the Government modified the requirement in the Finance Act 2004. The argument that underpins new clauses 3 and 7 and amendments Nos. 107 to 120 is that the Government have created a framework through the 2004 Act and the Bill that could give people much wider choice for retirement income planning through the introduction of the alternatively secured pension and the creation of an inheritance tax regime for left-over funds. Having accepted that, I contend that the Government should create more choice for people in retirement and more certainty for the state by introducing a further alternative to annuitisation and the alternatively secured pension—the retirement income fund, which is the subject of the new clause. The issue of compulsory purchase of annuities has been rumbling on for some time and was a topic of debate through private Members’ Bills. My hon. and learned Friend the Member for Harborough (Mr. Garnier), my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) and the former Member for Taunton all sought to address the matter through private Members’ Bills. My hon. Friend the Member for Eastbourne (Mr. Waterson) also raised it in discussions on the Pensions Bill and my hon. Friend the Member for Tatton (Mr. Osborne) did so in the Committee and Report stages of the Finance Act 2004. It is remarkable that, having doggedly defended compulsory annuitisation throughout the debates on the private Members’ Bills and the passage of the Finance Act 2004, the Government in a sense modified the principle of compulsory annuitisation in that Act. The Act and the Bill that we are considering create an architecture for an alternative to compulsory annuitisation. The 2004 Act introduced the concept of the alternatively secured pension, a mechanism that enabled the Plymouth Brethren to draw pensions that were not linked to annuities. They have well-known objections to annuities and required an alternative mechanism to establish a means of funding their retirement after the age of 75—the age at which an annuity has to be purchased. The Act enabled them to draw down a proportion of their pension fund after the age of 75, in line with specific rules, which I shall not go through in detail.