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Lord Beaumont of Whitley: My Lords, while thanking the Minister for that Answer, I wonder if he is aware that a leader in the latest issue of The Week magazine said that companies selling annuities to smokers at discounts threatened to cancel the annuities and confiscate the payments if the annuitants thereafter dropped to smoking fewer than 10 cigarettes a day. This
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is not a question of codes of practice. Is it not the equivalent of abetting suicide, which is a crime?
Lord Davies of Oldham: My Lords, the Association of British Insurers knows of no company offering annuities on that basis. Clearly, judgments are made by insurers about the length of time which someone is likely to live, on the basis of a calculation. But no company follows the practice which the noble Lord contends is an abuse. It certainly would be an abuse, and the Association of British Insurers would take action accordingly.
Baroness Noakes: My Lords, does the Minister agree that while the terms on which open-market annuities are offered is an important matter, the biggest issue about annuities at the moment is the absurd requirement for those reaching the age of 75 to use their pension funds to acquire annuities? When will the Government do something about that?
Lord Davies of Oldham: My Lords, the House will recognise that investments in money purchase saving enjoy a very generous tax privilege position in order that people can provide a guaranteed income for themselves to the end of their lives. An annuity provides the insurance against the uncertainty of life expectancy by pooling mortality risk. Because we as a society provide through those tax concessions generous support in the build-up of those annuities, it is right that we should insist that the pot of money that becomes available is devoted towards an income that will sustain someone through their life. That is why there is a compulsory element to it.
Baroness O'Cathain: My Lords, is the Minister confident that such tables are accurate, bearing in mind that one of the observations of Adair Turner's pension review was that the actuaries got it all hopelessly wrong? Are they using the same tables?
Lord Davies of Oldham: My Lords, certainly that was an important point from the report on the pensions issue that we received this week, of which we have taken very clear note. The House will recognise that the report is an interim one. It certainly meant to provoke widespread serious thought about the future of pensionsand it will come as no surprise to the House that that is exactly the view that Ministers take on pensions. Some difficult decisions lie ahead, which are of course not aided if there are doubts about statistics. That point in the report is to be taken seriously.
Lord Newby: My Lords, returning to the original Question, I wonder whether the Minister could go back to the ABI. It is a serious public policy issue if there are policies which, in effect, encourage people to continue a practice which the Government are trying to persuade them to stop. I felt that the Minister's response was rather complacent. Could he give the House an assurance that he will go back to the insurance industry,
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find out whether in fact such policies exist and, if they do, make the Government's displeasure clearly known to the relevant companies?
Lord Davies of Oldham: My Lords, I certainly give the assurance that I shall look further at the situation. I would not wish to be accused justifiably of complacency about such an important public health issue. However, the point that I sought to make about the original Question was that the Association of British Insurers knows of no firm that offers annuities that are conditional in that way. It is not a question of going back to the ABI for that information; we have been to the ABI, which is why I am able to state that in such categorical terms. But of course I shall follow up the point further.
Lord Marsh: My Lords, I declare an interest as an ex-insurance executive, now living on a pension from the industry. The issue is very simple. Whether a person does or does not smoke has major actuarial implications. Therefore, in the course of granting a life policy, the applicant will be asked whether he smokes. If he says yes, he will automatically get a much better deal. If it then subsequently becomes clear that he had stopped smoking a long time before, the company would be able to claim that he gave a false declaration and that the policy was invalid.
Lord Davies of Oldham: My Lords, I hear what the noble Lord says, but he will recognise that there is a vast difference between a policy asking the question, "Has the applicant been a smoker and is a regular smoker?" and one which actually applies the policy conditional upon future behaviour. That was the burden of the original Question. I was merely seeking to assure the House that, of course, account is taken of past practice and current states of health when decisions are taken but that the Association of British Insurers believes that no one is acting in this crucial area, as regards the contingent element, in the way which the noble Lord, Lord Beaumont, identified in his original Question.
Lord Jenkin of Roding: My Lords, would the Minister's inquiries perhaps bear more fruit if he could persuade the noble Lord, Lord Beaumont of Whitley, to provide him with the evidence on which he based his Question? Is not the Minister right to lay stress on the word "conditional"? I never saw anything remotely like that during my period in the life insurance industrybut no doubt the noble Lord, Lord Beaumont of Whitley, will be able to produce evidence.
Lord Davies of Oldham: My Lords, to be fair to the noble Lord, Lord Beaumont of Whitley, I understood that he was quoting some aspect of evidence, which will be in Hansard and which we would automatically take on board very seriouslyparticularly as I have given the undertaking to follow up the matter. If the
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noble Lord is able to quote chapter and verse in much greater detail, it is in his interest to provide that information and in ours to follow it up.
in the circumstances set out in paragraphs (a) and (b). Under Clause 2(1), the responder has a duty to assess and plan. That has to be the first stage, which must be right. However, under Clause 2(2), the duties required to be undertaken to assess and plan apply only in certain circumstances. I am unclear on how the responder can know whether the circumstances apply unless the provisions are under subsection (1).
There may be services and circumstances in which it is necessary to know who takes the lead. The Minister and I are both veterans of the Fire and Rescue Services Act, in the passage of which there were discussions on the relationship between the fire and police authorities. The issue may be covered by other legislation; I simply do not know. The point may be quite technical. The draft regulations provide for protocols between responders, and perhaps who will take the lead will be covered in those, but I would be grateful if the Minister would assist.
I query whether regulations should provide whether a specified person or body is not to perform a duty. It is a bit puzzling that regulations could, in effect, say to a
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body, "We have just given you a whole page that tells you what to do. Now we are telling you which of that list you are not to do".
An NHS trust may not be the body to assess a risk, for instance. I would accept that, but I am unclear about how the provision will work. Will the regulations provide that those who assess risks will disseminate their findings and evaluation to bodies such as an NHS trust that would not be required to assess it, if the regulations so provide? I hope that I have picked the right sort of example.
Amendment No. 38 would omit Clause 2(5)(o), which provides for regulations to confer functions on Ministers, the National Assembly for Wales and so on. I acknowledge that an affirmative resolution will be required but, constitutionally, it seems quite interesting that Ministers can acquire extra functions through a back-door route.
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