House of Lords to debate proposed reforms to the state and private pension

UKParliament

Today the House of Lords will be debating proposed reforms to the state and private pension.

We expect this debate to start at 11.30am. You are able to watch this debate live and on catch-up on Parliament TV.

This debate has been moved by Lord Flight, former shadow Chief Secretary to the Treasury.

jamesd

The first speech to the Lords by Baroness Altmann of Tottenham, CBE, starts at 13:10:35.

It would be good if Baroness Altmann provided a practical demonstration of treating customers fairly by having the government refuse to sell Class 3A National Insurance contributions to those who would be better off deferring the state pension instead, which normally means those under age 81-82 who are eligible to defer, unless it has specifically told them how much more they could get by deferring and received confirmation that they want to do the thing that pays them less. With real numbers for the individual that annuity vendors could in turn be required by regulation or law to provide before selling an annuity. Better still would be the state providing a lump sum deferring option that mimics annuity purchase and provides income from the lump sum from the first month, ceasing deferral once the money runs out unless the consumer chooses to add more.

As with the private sector, this would involve the government selling a more costly product but bettering the consumer outcome, since Class 3A are asserted to be cost-neutral while deferring is at a substantially higher rate.

Some things that I noticed:

1. A band will be playing in Edinburgh in mid July during her visit there.
2. While she specialised in pensions, her father died at 50, before he was able to retire (comment: something that the pension freedoms don't allow people to do at or before 50 even if they know they will die young and have ample funds to live on).
3. By 2017 an independent review of the state pension age.
4. She supports the pensions freedoms and finds "most disappointing" the barriers being put in place for those who are trying to use the freedoms, including delays, charges and exit charges. A consultation is to be launched next month to collect evidence to help "prevent consumer rights to play second fiddle to the interests of large financial firms". "I intend to take action to drive fair treatment of customers".
5. Fees and charges are of interest.
6. The creation of PensionWise is important (comment: though why doesn't it even bother to mention state pension deferral when that normally beats buying annuities!).
7. She's discussed the issues of affordable advice with the FCA and others.
8. Social care funding needs much more attention in the way of incentivising savings for it in a range of possible ways, from saving through insurance.
9. She's sympathetic to the pension liabilities issue for employers in DB schemes in the current low interest rate environment. She recognises that DC is the future. (comment didn't say anything about DC for the public sector)
10. Auto-enrolment is doing well so far but an easier way to handle it for micro-employers is desirable and she has already had many meetings about this.

A good first speech and I join with the members in their welcomes to her.