HC Deb 14 July 1987 vol 119 cc1035-6

Question proposed, That the clause stand part of the Bill.

7.45 pm
Mr. John Greenway (Ryedale)

I declare an interest as a practising insurance broker. What advice will the Treasury give to life assurance companies with regard to clause 22(2) in respect of existing retirement annuity contracts? If in this legislation we are introducing a new minimum retiring age of 50, which I greatly welcome, what will happen to existing retirement annuity contracts? Some guidance on the question will be necessary either today or in the future.

Mr. Norman Lamont

Subsection (2) stipulates that a member's annuity must normally commence between the ages of 50 and 75. But subsection (3) permits commencement before the age of 50 if a member retires early through ill health or incapacity, or if the board is satisfied that his occupation is one in which people customarily retire early.

Mr. Greenway

Perhaps I have not made the point clear. As my right hon. Friend will know, under the 226 and 227 1970 regulations, the minimum pension age is 60. We are now introducing a new concept. I greatly welcome the fact that we are reducing the age to 50, but it will create a dilemma with regard to practice between now and 4 January next year. Should people be advised to wait until next January to obtain an earlier age, or will the Inland Revenue accept an earlier retirement age applied to existing retirement annuity contracts?

Mr. Lamont

Existing retirement annuities will continue on the same basis, but I am advised that they will be able to convert to personal pension plans. That is all that I can tell my hon. Friend at this stage. But I understand his point about whether the new conditions should apply to those who invest in annuities between now and January next year and what advice they should be given. I shall try to make available more precise information to my hon. Friend.

Mr. Greenway

I am most grateful.

Mr. Blair

The hon. Member for Ryedale (Mr. Greenway) has made an important point. The present age limit is 60, and subsection (2) would change it to 50. Will subsection (3), which allows the annuity to commence even before age 50, translate into legislation what already exists in practice? My understanding is that it does not. As a result of subsection (3), the annuity will commence before age 50 if it is payable on the person becoming incapable through infirmity of body or mind of carrying on his work or if the board is satisfied that the occupation is one in which people customarily retire before that age. I understood that if the board could be persuaded that people normally retired young in an occupation, it would allow the annuity to be paid before age 60.

Mr. Norman Lamont

I am sorry that I cannot answer the point put by the hon. Member for Sedgefield (Mr. Blair). I undertake to make the position clear to him.

Sir Brandon Rhys Williams

Subsection 22(5)(a) refers to the marriage of the annuitant as being one of the reasons why an annuity may terminate after the death of a member. Clauses 24 and, I think, 25 refer to what happens to annuities after the death of a member. I do not want to rule out the possibility of my raising a point concerning clause 24 by failing to put down a marker here. This matter appears to be foreshadowed in clause 22(5)(a)

Question put and agreed to.

Clause 22 ordered to stand part of the Bill.

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