I am delighted to follow the right hon. Member for East Ham (Stephen Timms) and to know that I have the opportunity to persuade the massed ranks of the Labour party of the merits of my amendment. I shall do my very best to do so.
Four of the most significant players in the United Kingdom pensions market are based in my constituency of Reigate: Just Retirement, Legal and General, Partnership, and Fidelity. I should declare, if it is an interest, that my son works for one of those companies—Just Retirement. Between them, they employ a pretty significant number of the constituents I am privileged to represent. The past six months since the announcement in the Budget of the measures in this Bill have not been easy for them. The number of annuities purchased has dropped off a cliff, as customers and financial advisers await the implementation of the reforms.
Overall, however, the need for and the rightness of the reforms cannot be doubted. The pensions market has for too long been shackled by the obligation to annuitise; annuity rates have fallen consistently over the past two decades; and strenuous competition and liberalisation is just what the industry needs if each new batch of retirees are not going to find themselves commensurately worse off than their predecessors. The proposals are right not only on a practical level, but ethically as well. It is farcical that we have deemed retirees incapable of managing their own finances and have paternalistically restricted access to the money for which they have worked hard throughout their lives.
4.45 pm
I intervened earlier on the shadow Minister, the right hon. Member for East Ham (Stephen Timms), on the issue of the kind of market we want to create. There needs to be guidance, but in the end it can only be guidance; the decisions are the responsibility of the people themselves, operating on the best possible guidance and, indeed, informed advice should they wish to go down that route and pay for it.
The success over the past decade of both Just Retirement and Partnership—two of the smaller companies in my constituency—has been driven by their innovation, entrepreneurship and ingenuity. They have led the market in the development of specialist annuity products better targeted at the needs of precisely the types of consumers referred to by the shadow Minister. They are well-led and nimble businesses, and models such as theirs should be best placed for success in a reinvigorated market. However, the Government’s lack of detail on the issue of guidance will not only handicap those companies as they wait for it, but potentially put the success of the whole reform in peril.
The Government’s commitment to the guidance guarantee has, of course, been well received by the industry and consumers, but widespread consumer ignorance of the pensions market is well documented. The Department’s own 2012 “Attitudes to Pensions” survey found that 49% had no knowledge of the requirement to annuitise.