UK says retirement bill could hit bond market
UK – The government has said that a proposed amendment to retirement legislation could hit the UK government bond market and cost hundreds of millions of pounds.
Treasury minister Ruth Kelly said that the costs of the Retirement Income Reform Bill currently before parliament “could run into hundreds of millions of pounds”.
“It is not at all clear that the gilts market would in any sense be able to cope with the bill’s requirement for index-linked annuities for everybody at the age of 65,” Kelly said in a debate on the bill in the lower house, the House of Commons.
She said the bill would lead to the “restriction of choice for the vast majority of pensioners, albeit with the extension of
choice in certain directions for a few privileged pensioners”.
There was “an inherent conflict” between the bill and the government's desire for flexible retirement and active ageing, she added.
The bill is being introduced by opposition conservative MP Edward Garnier, who said that “a sclerosis has beset our economy that is almost exclusively caused by the collapse in the pensions system”.
Garnier said that “at every level” of the UK economy there were companies that are no more than “overdrafts attached to pension deficits”.
The bill aims to amend the law relating to the provision of retirement income in respect of private and personal pensions, annuities and defined and additional voluntary contribution pension schemes.
The bill, whose passage is seen as a formality, passed through its second reading last week with 127 in favour and 29 against.