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Mr. Webb:
I should put on record, for the benefit of the whole House, the Committee's appreciation of the hon. and learned Lady's contribution in Committee, where she secured that a report be made next year on women's pensions issues. This group of amendments represents one of those issues, although obviously it relates to men as well. As she said, this set of amendments refers particularly to women, because if a person buying an annuitytypically, a manfails to provide for his surviving spouse, it is women, typically, who lose out. In a number of forumsin the House, Westminster Hall and elsewherethe hon. and learned
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Lady has stood up for women pensioners in particular and she deserves a great deal of praise for that. [Hon. Members: "Hear, hear."]
I support some of the amendments in the group. Amendment No. 44, which would allow regulations to be made to make provision about information and advice to employees and their spouses, seems entirely appropriate. We need more information and advice. However, I have always felt uncomfortable about the written permission referred to in amendment No. 48. I am trying to work out what it is that makes me feel uncomfortable.
Although the process that the hon. and learned Lady describes is technically gender-neutral, let us take the most common case, in which a man gets to the point where he has to buy or wants to buy an annuity. If the amendment were agreed to, he would be prohibited from buying a single life annuity without the written consent of his wife. That just does not feel right. That is not a very good argument, but it does not feel right that an individual who has saved for their own pension should be prohibited from buying with that pension the particular investment vehicle that they think is right. My worry is the power of veto. I do not have a problem with the amendments that provide for both partners to be given information. One would hope that in a normal relationship they will talk to each other, weigh things up and make a decision. The power of veto would presumably apply where relationships are not working quite as well as that.
Whether the answer is to give one partner a legal block on the other partner's ability to buy a single life annuity worries me. Let me give an example. Supposethis may be a less typical casethat the man who wants to buy an annuity has a pension pot. That is his entire pension provision for old age, whereas his wife has a fantastic occupational pensionsay, she had been a Member of Parliament or something like that. Even though all the annuity will come out of his savings and it is all he has to depend on, he still needs her written permission not to make provision for her. The hon. and learned Lady might well say, "Yes, but being a reasonable woman, she will give it", and she may do so.
Often in legislation we have the concept of what may reasonably be done. If everyone were behaving reasonably, we would not need the provision at all, because they would all talk to each other, they would have been sent the leaflets and they would make a joint decision. We need the power of veto presumably for couples whose relationship is not terribly good. Is it right in all cases to prohibit one partner who may need the money from buying the annuity that serves hisin this case, hispurposes best? Although his wife may subsequently get her very good pension, if the relationship is not terribly good, she may not share it. Obviously, the converse of all those things is true if one transposes the gender, but we are dealing with a typical case.
I think that the hon. and learned Lady would accept that there is a raft of issues to do with women's pensions that need addressing, of which this is one. There is a raft of issues even on the subject of survivors' benefits, of which this is a subset. It would be unfair to criticise the proposals as piecemeal, because we all do things
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piecemealthat is all we can do when faced with legislation. We try to make the world a slightly better place where we can.
That is meant not as a criticism, but as an observation that we need a strategy for widows and other survivors that encompasses not only annuities and, hence, money purchase pensions, but occupational pensions, where in many cases there are no survivors' rights, as well as public sector pensions. Until the happy day comes when men and women have accrued enough pension in their own right and we can do away with the concept of survivors' benefits, which must be the goal of pensions policy, we must tackle this huge generational transition. I fully accept the need for a provision such as amendment No. 44, which lays down requirements on information and ensures that both partners know what is going on, but the power of veto seems one step too far.
Vera Baird: Divorce law establishes that pensions are joint assets on divorce and therefore during marriage. Pensions are analogous with other joint assets such as houses, which cannot be mortgaged without the consent of both parties. Why does the same argument not follow for pensions?
Mr. Webb: The point is fair, but one of my worries is that the position is not necessarily reciprocal, because amendment No. 44 relates only to a specific category of pension provision. In my example, the man has a defined contribution pension that must be converted into an annuity, but if the woman has a final salary pension with no survivor's rights, asymmetry would be created.
The hon. and learned Lady argues that the pot of money to buy an annuity is the couple's joint property, but on that basis their joint property should also include the woman's occupational pension. The woman would have the power of veto over the man's pension, and asymmetry would occur because the provision does not include her occupational pension; it is not holisticthe example holds for both men and women if we were to reverse the genders.
The idea is right, but the power of veto is not what we want to introduce when dealing with pensions. We want to make substantial general provision for survivors, who are predominantly women. The hon. and learned Lady was right to table amendment No. 44, and I support some other amendments in the group. I hope that the Minister reassures us that the Government have a broad strategy on survivors' benefits, and if he can do so, the hon. and learned Lady will have done us all a great service.
Mr. Pond: My hon. and learned Friend the Member for Redcar (Vera Baird) asked for a positive response, which I can certainly give her. I add to the tribute paid to her by the hon. Member for Northavon (Mr. Webb) for her vociferous arguments on the issue.
Clause 219 aims to ensure that where employers contribute little or nothing towards their employees' pensions and where levels of scheme membership are low, employees get access to the information and advice that they need to help them make an informed choice about savings for retirement. As part of that requirement, employees will receive information or advice about annuities, where it is appropriate.
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The amendments promoted by my hon. and learned Friend the Member for Redcar work with the grain of both our agenda of informed choice and our determination to ensure justice for women in pensions matters. The amendments would considerably extend the requirements in clause 219, and would, via the Secretary of State's power to make regulations, require employers and providers of annuities to give employees, purchasers of annuities and their spouses access to information and advice about retirement planning and, in particular, annuities.
That fits with the informed choice agenda, but I ask my hon. and learned Friend to consider the practical difficulties, which we must examine in deciding whether we can take the amendment forward. The Government believe that employers have a responsibility to help their employees provide for their retirement, but to extend that responsibility to cover the spouses of employees presents considerable practical difficulties. For example, arranging presentations or one-to-one advice sessions in the workplace for employees' spouses would not be an easy task. Such a requirement would lead to additional complexity and costs that many employers, especially the smallest employers, would find difficult to bear.
In addition, providing information and advice to spouses about annuities and other pensions matters might well raise data protection issues, as well as conflict of interest issues, for providers and employers. We recognise that consumers who are considering retirement and who must purchase an annuity face an important and complex decision. That is why the Financial Services Authority has already introduced changes designed to help people choose the annuity that is best for them.
FSA rules now require providers of personal pensions to give annuity purchasers information about open market options. For example, many issue the FSA leaflet, "Your pensionit's time to choose", which explains in simple language what an annuity is, as well as the options that are available to people and how they can shop around to get a better deal. In January this year, the FSA published further guidance in its "Guide to annuities and income withdrawal", and since the spring of 2003 it has included annuities in its comparative tables to make it easier for purchasers to shop around for the best value annuity available.
Additionally, new rules introduced in this year's Finance Bill will mean that occupational money purchase schemes are required to offer members the opportunity to choose between a scheme pension and a lifetime annuity. If they choose the annuity, members will again be informed about their open market options.
The issue of annuities has been the subject of considerable consultation over the past few years, and the outcome of that consultation has fed into our pensions simplification work. In answer to the hon. Member for Northavon, we are seeking to put in place provisions that will ensure that surviving spouses have support. We are strongly committed to the concept of
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informed choice, and we are trying to move forward on that. We are also committed to the concept that pension provision should close the inequality that has traditionally existed between men and women. I understand that that is why the Fawcett Society, the Equal Opportunities Commission and Age Concern have supported such proposals, which, although we find them attractive in principle, involve issues of practicality that we need to resolve.
I can assure my hon. and learned Friend that we will keep the need for further annuity-specific information and advice under review and that we will continue to assess how we can move forward on this agenda. I hope that given that reassurance she will feel able to withdraw her amendment.
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