Banned wagon
A weekly survey of the things our rulers want to prohibit
MOST bad laws make some kind of perverse sense in that they help to enrich the government's coffers or to satisfy some puritanical ideology. A few do not appear to make any sense, however hard you look at them. One of them is the compulsion on holders of pension funds to convert those funds into annuities by the age of 75. Your accumulated pension fund, in effect, must be swapped for a life-insurance policy in reverse: an insurance company agrees to pay you a fixed sum each year until you die, whereupon it pockets your lump sum.
If you reach the age of 75 in good health and have reason to expect to live a long time, the deal makes sense. If, on the other hand, like many 75-year-olds you have health problems and are keen to leave some money to help your family, the compulsion to turn your life savings into an annuity is little more than government-sponsored mugging. Die the day after your 75th birthday and those life savings will be gobbled up in their entirety by an insurance company.
It would be easier to understand if the money were going into the public purse — then at least you could make sense of the Chancellor's refusal to budge on the issue. The government's official response is that if retired people are not forced to buy annuities, they will blow all their savings on a cruise and thereafter fall back on the welfare state. But it is easy enough to devise rules to prevent people drawing excessive income from their pension fund in the early years of retirement. One can only imagine that the government has an ideological objection to people inheriting money.
The Tory member for Skipton and Ripon, David Curry, has tabled a private member's Bill which would remove the compulsion on retired folk to buy annuities. It is highly unusual for people in his position to choose a piece of deregulation for their moment of glory. Others should celebrate by supporting it.
Ross Clark
Previous page
