Clause 1 - Amendment of the Income and Corporation Taxes Act 1988
Retirement Income Reform Bill
2:15 pm
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
Nothing in the Bill now deals with those concerns.
It is important, because the hon. and learned Member for Harborough spoke of it, to mention the Inland Revenue's pension simplification review. It is in that context that discussions are taking place with the Christian Brethren. Their principled objections are based on the pooling on which annuities depend, but the review will completely change the pensions landscape. The hon. Member for Arundel and South Downs rather understated the significance of the measures that we consulted on; we are now weighing the responses to that consultation.
The Government's policy remains that tax privileged pension savings must be used to provide retirement income for life from no later than the age of 75, and for no other purpose. For those with personal pension schemes, the most financially efficient way of achieving that is to buy an annuity. That is clearly the right thing to do in the vast majority of cases. However, because of the Brethren's principled objections to the purchase of annuities, the simplification review looked for another way of turning pension savings into retirement income in a way that replicates the advantages of annuitisation without the pooling of funds.
The Government are considering views from a wide range of groups, including those with more narrow objections, to see what might be made to work. We aim to produce detailed proposals in the autumn. If possible, we aim to include draft legislation in next year's Finance Bill, with implementation in April 2005. However, the Bill no longer makes the sort of provision that members of this and previous Committees and those Members who spoke on Second Reading professed to be concerned about.