§ Baroness Turner of Camden
asked Her Majesty's Government:
Why, and on what basis, they claim that proposals for annuity reform would cost "many hundreds of millions of pounds" (Red Book, Budget 2001, HC 279, paragraph 5.67, page 95); and how such heavy costs would arise. [HL1250]177WA
§ Lord McIntosh of Haringey
Relaxing the existing requirement to purchase an annuity would provide an incentive for some to use pension schemes for purposes other than providing a secure income throughout retirement. Costs will vary depending on the nature of any reforms, including what level of income must first be secured and what tax charge is applied to withdrawals above that level. Proposals for tax-free withdrawals could cost billions of pounds a year in lost income tax and extra tax relief.