Pensions

Lord McFall of Alcluith Excerpts

Thursday 26th June 2014 Lords Chamber

[Lord Newby]

The answer is that it may be or it may not be, depending on what people want to do. One can envisage there being cases at workplace level, where there is a workplace scheme, where it is sensible to start off, for example, by having a collective session followed up by individual guidance. The key thing which we want to underline is that individual guidance will be available. As I said earlier, however, not everybody will want to receive it in the same way.

[Lord McFall of Alcluith (Lab)]

My Lords, the Budget Red Book indicates a bonanza for the Treasury in the next few years as a result of this annuities treatment. This policy could have echoes of the pensions mis-selling scandal of the 1980s, which cost £12 billion. If the Government are not clear and unambiguous that this means individual advice, people will be left on their own and be mesmerised. It is a good thing for the Government, but a bad thing for individuals. The Government need to act very quickly on this.

[Lord Newby]

My Lords, the Government are acting quickly on it, and we absolutely agree that this must be seen as a good thing for individuals. This scheme is not being introduced to make a short-term improvement in government finances. I remind noble Lords that a number of countries—for example, Australia, Denmark and the US—already have the kind of provision that we are proposing. The FT recently reported that, when the leading finance and pensions expert was asked about this, he said:

“There’s nothing to suggest that Poms are any more stupid than Australians”.

I agree with him.