New clause 1 - Application of Act
Pension Annuities (Amendment) Bill
9:30 am
Mr Howard Flight (Arundel and South Downs, Conservative)
I beg to move, That the clause be read a Second time.
New clause 1, in essence, provides that someone who is already a member of a money purchase pension scheme at the time when the Bill becomes an Act should have the option of remaining under the existing rules pertaining to that scheme or coming under the new arrangements. If they were not already a member of such a scheme, they would be bound by the new arrangements.
The underlying principle is the point made on Second Reading, to which I alluded on amendment No. 30. We would not want to place people in a position that could be less to their benefit than remaining under existing law, especially when they had been saving up in a pension scheme. It is clearly wrong to change the rules when people are already on
track with their pension saving. That relates in particular to the point already made about those who might have to use a considerable part of their money purchase saving pot to buy the retirement income annuity. For safety, that shall have to be inflation-linked for the future, as has been prescribed. Many people might want to buy a fixed-rate annuity for the higher running yield that that gives. That could be potentially unfair. The correct approach is to give people who are on track the right to stay under the present arrangements and to make the new arrangements apply on an obligatory basis only to those who join a pension scheme after this law has changed.