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Clause 5 - Drawdown requirements for SaRA schemes

Part of Rights of Savers Bill – in a Public Bill Committee at 3:15 pm on 14th December 2005.

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Photo of Nigel Waterson Nigel Waterson (Also PPS To the Chairman of the Party), Work & Pensions & Welfare Reform 3:15 pm, 14th December 2005

I express the Official Opposition’s support for the provision. Obviously in an ideal world, people would do the traditional thing of locking away their pensions contributions for 40 years, which would be great. We know, however, that savings in this country have halved since 1997 and that many young people are turned off the idea of locking away their contributions. As my right hon. and learned Friend said, there is ample evidence from north America, witnessed particularly by the success of the 401K schemes, that a limited series of drawdowns can be permitted within very tightly defined constraints.

I am the first to say that there is scope for legitimate debate about the way in which such drawdowns would work and the categories that apply. I am only sad that the Government have not chosen to engage in that debate, but are seeking yet again to scrap the whole clause.

The Official Opposition broadly support the contents of the clause, which we believe would do an enormous amount to encourage particularly younger workers to get back into the savings habit for their retirement.