Peers scrap law on compulsory annuities

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The Independent Online

The government was defeated on yet another crucial pensions vote in the House of Lords yesterday as peers passed an amendment to scrap a proposal to compel people to buy an annuity at the age of 75.

The government was defeated on yet another crucial pensions vote in the House of Lords yesterday as peers passed an amendment to scrap a proposal to compel people to buy an annuity at the age of 75.

The victory for the Liberal Democrat and Conservative peers, led by the Lib Dems' Lord Oakeshott, is the latest in a series of defeats sustained by the Government over the past week as the Pensions Bill has been completing its final readings in the House of Lords.

The latest defeat, yesterday evening, saw the Government defeated by 198 votes to 144.

Steve Webb, the Lib Dems' spokesman on pensions, said: "This has been a Lib Dem policy for some time. Provided you have a safeguard of taxpayers' interests in this process, then how people draw down what they've saved should be their business, and not the Government's. Winning this vote is good news, and another step in the right direction."

Lib Dem peers also tabled an amendment calling for executives of the new pensions protection fund to be paid in line with typical corporate final salary pension schemes, rather than the Government's generous index-linked scheme. On this vote it was unsuccessful.

The Government's defeat over compulsory annuity purchase adds to what has been an embarrassing few weeks for it over pensions, with a series of mixed and contradictory messages having emerged from the Department of Work and Pensions and the Treasury.

Although the Government is almost certain to overturn the latest amendment when the Pensions Bill passes back through the House of Commons this week it will further delay the Bill, which must complete its passage through Parliament before the Queen's Speech on Monday. It may also corner the Government into committing to a review of the controversial policy.

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