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Clause 5 - Drawdown requirements for SaRA schemes

Part of Rights of Savers Bill – in a Public Bill Committee at 3:00 pm on 14th December 2005.

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Photo of John Penrose John Penrose Conservative, Weston-Super-Mare 3:00 pm, 14th December 2005

The amendments are technical and designed mainly to extend the purpose of this part of the Bill. Clause 5(6) specifies three or four different ways in which drawdown can take place early from a SaRA. Subsection (6)(b) specifies that an account holder can allow drawdown to provide financial assistance to a child

“in making his first house purchase for his occupation as his principal residence”.

Under amendments Nos. 24 and 25, the provision would be extended to include grandchildren, the purpose clearly being, first, that the provision was still within the family and, secondly, because it would be more likely that grandparents will have amassed a sufficiently large pot of funds in their SaRA to afford to help out another family member, whereas those at an earlier stage of life—perhaps in their 30s and 40s—might find that a little hard.

Amendment No. 23 would amend subsection (6)(c), which is designed to allow drawdown from a SaRA when someone is about to undertake a course of higher or further education. It would add “accredited”   because a number of courses offered by further education colleges are not fully accredited. Many are commonly known as leisure and pleasure courses.

It might not be appropriate to allow a drawdown from a retirement fund for a course on something comparatively simple such as flower arranging; one should try to arrange for something that carries a formal qualification. The amendment would ensure that it is done for sober and serious purposes rather than for less serious ones.