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I welcome engagement in the debate. The evidence from the US on this issue is interesting. I wonder, though, whether the hon. Gentleman has seen the research from the ABI on 401Ks. In the US, 401Ks allow decumulation at the end of every period of employment. The ABI concludes:
“The fact that only a fifth of those in the USA who opt to unlock their pension fund on changing jobs plan to roll their pension savings into a new pension suggests that there are real risks in abandoning the UK’s approach of preventing decumulation until 50 years of age”.
The ABI makes an important point that must be weighed in the debate.
It is true, of course, that money withdrawn would need to be repaid in order to retain the tax privilege position, but there is no requirement for the account holder to make new payments into the account on top of the repayments. Therefore, money withdrawn may be replaced, but money may not be added. There is a question about whether we would, in fact, find that pensions had been reduced rather than increased.
A major practical difficulty is the complexity and possible cost of administering such a scheme. When arrangements have matured in a SaRA, one could have money going in as new savings, money being withdrawn and money being paid in as repayment of one or more previous withdrawals, all at the same time. That would be extraordinarily complex for account holders, account managers, employers who might be making payroll deductions and Her Majesty’s Revenue and Customs, who would have to keep track of the tax position if withdrawals had been made. I suppose that everybody would be required to work out the tax on their self-assessment form, but that would be complex—too complex to be practical, I suspect.
As was pointed out on Second Reading, the sum of £40,000 is beyond the realms of possibility for many people. The things that they might wish to save for, in addition to a pension, will often be more modest than buying a house, which is one of the purposes proposed in subsection (6). The Bill could leave people who have an outstanding and immediate unforeseen debt unable to access their funds in order to clear it, although they could access the funds to buy a house. The rationale for that is difficult to grasp.
There is a discussion to be had about the role of greater flexibility, but the form proposed in the Bill raises at least as many questions as it answers, and I urge my hon. Friends to resist the clause.