Clause 12 specifically addresses the iniquity of the age limit rule in capital protection of annuities. One of the principal criticisms people have made of conventional annuities is that in the event of the annuitant’s death, the remaining capital from the pension fund is lost. From April 2006, value-protected annuities will be available, which enable the return of annuitants’ original capital minus the annuity payments received and minus a tax charge when they die. However, the rules state that the annuitant has to die before reaching the age of 75 in order to receive a return of capital. That is clearly a totally arbitrary approach.

The Association of British Insurers has found that 47 per cent. of annuitants would be interested in the option of a value-protected annuity and would be willing to give up a reasonable amount of income for one. In fact, a fifth of those whom the ABI surveyed were prepared to give up to 20 per cent. of their annuity income in order to be able to pass on something after their death. I have referred to the conclusion of the Turner report that the age of 75 has become rather an arbitrary one that should not be insisted upon by the Government, and I commend the clause to the Committee.