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Treasury &#39guessed&#39 annuity reform cost

The Treasury has conceded it did not accurately calculate the cost of alternative regimes before opposing relaxation of annuity requirements.

Prime Minister Tony Blair said in the House of Commons last week change was ruled out because of the cost. The Budget Red Book claimed it would cost hundreds of millions.

Money Marketing understands that, without executing full calculations, the Treasury has guessed the alternative regimes proposed would cost around £400m a year.

Five Parliamentary questions from across the political divide have been tabled to uncover the cost basis used by the Treasury. Those tabling questions include Labour peer Baroness Turner and MP Jim Cousins, Conservative MPs Sir George Young and Howard Flight as well as Liberal Democrat MP Sir Robert Smith.

Tory pensions spokeswoman Jacqui Lait plans to raise the issue on the next Opposition Day on April 2.

A Treasury spokesman says: “We have not figured it out down to the last penny but our position is this would cost considerable sums of money.”

Lait says: “It seems a very casual approach to money. I rather suspect the Prime Minister panicked and said the first thing that came into his mind.”

Winterthur Life pensions strategy director Mike Morrison says: “This demonstrates there is no getting away from the serious support for reform.”


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