private members bill calling for amendment to law requiring compulsory purchase of annuities at 75 goes through with a majority of 112
The private members bill calling for amendment of the law requiring the compulsory purchase of annuities at age 75 has cleared another hurdle after it was passed despite Government opposition.
The bill, brought by Tory MP David Curry, was passed with a majority of 112 despite a highly critical speech made by chief secretary to the Treasury Ruth Kelly and repeated pronouncements from ministers and industry bodies that it is designed primarily to help the rich.
It will now go through the committee stage, where it will be considered in greater depth before being returned to the House.
The bill advocates the establishment of a retirement income fund which would be used by investors to purchase a minimum retirement annuity at a level set by the Chancellor each year.
After this, pensioners would have freedom to invest surplus funds and pass them to spouses on death. The remaining fund would be subject to inheritance tax on the death of the spouse.
Howard Flight, shadow paymaster general, said the victory made it much more likely that investors would no longer be forced to buy an annuity. He said: 'It makes it much harder for the Government to ignore the fact that the overwhelming majority of people don't want to be forced to buy an annuity.'
The Conservatives had a three line whip supporting the motion, something very unusual for a private members bill. They were supported by the Liberal Democrats and several Labour MPs. Shadow Chancellor Michael Howard MP, and Iain Duncan Smith, the Conservative party leader, joined several other frontbenchers and about 30 other Conservative MPs who attended the debate.
The Labour Party had only seven MPs present for most of the debate and only 27 voted against the bill. Some Labour MPs were broadly supportive of the aims but felt that the bill did not get it right. Mark Hendrick, Labour MP for Preston, said: 'The area needs looking at but after listening to Ruth Kelly I feel that it is too weighted to those on high incomes.'
The ABI shared this view saying that the bill would only affect 5% of pensioners. Joanne Segars, head of pensions at ABI, said: 'There should be a focus on promoting investment by those on middle and lower income, this bill is really aimed at those at the very top of the income scale.'
Although supportive, Liberal Democrat Work and Pensions spokesman Steve Webb, came up with criticisms of the bill. He said: 'There are difficulties with calculating what level of investment will be needed to provide an income that will keep people above the minimum income guarantee. There could also be a problem with the Treasury losing out if money is passed to surviving spouses without being taxed.'
Tim Boswell MP, a member of the Conservative work and pensions team, said the bill could still easily be sabotaged by Government. He said: 'The Government could kill it by smothering it with amendments and wasting time but it could have stopped it getting to this stage if they were determined to.'
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