Schedule 34 - Pension schemes etc:

Part of Finance Bill – in a Public Bill Committee at 10:30 am on 22 June 2004.

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Photo of Quentin Davies Quentin Davies Conservative, Grantham and Stamford 10:30, 22 June 2004

One more point must be made. It is clear from the debate that a relatively small number of people would be affected by the amendment. If we do

not accept my hon. Friend's amendment, we may create an incentive for people who are highly paid, who are in danger of going above the lifetime earnings limit, who have been with the same employer since 1989 and who were already highly paid at that time to leave their employment by A-day and to take their benefits in order to preserve them. It seems perverse to force highly paid people, who may be making a great contribution to the economy, reluctantly to leave their job simply because the financial penalties of remaining in it and in their pension scheme would be considerable. They would incur a great opportunity cost if they remained.

It is important that we never create in our tax law an incentive for people to behave in an economically perverse manner. Nothing can be more perverse than someone leaving employment and going into idleness or unemployment, or taking their pension earlier than they otherwise would have wished. I hope that the Financial Secretary will address that point when she responds.