Clause 48 - Employer asset-backed contributions etc

Part of Finance Bill – in a Public Bill Committee at 3:00 pm on 14 June 2012.

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Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury 3:00, 14 June 2012

I will first address the shadow Chief Secretary’s question. The measure should not affect the number of schemes that are set up. Clause 48 and schedule 13 seek to protect revenue, and the only schemes that will be affected are those that seek to claim more tax relief than is warranted. I do not think any of us would want schemes to be designed to claim more tax relief than is due to a company, and I do not believe that the measure has that effect.

The arrangements are important, and we want pension schemes to remain open where possible. Employers may contribute, for example, by identifying an income stream from an asset or by transferring an asset to the scheme for a limited period, which helps the schemes stay open. It is in the interest of employers and employees that we do what we can to help while ensuring that the Exchequer does not lose out through excessive tax relief.

The hon. Member for Bassetlaw asked whether there were any nasties that might affect pensioners, and the answer is no. The rules are clearly defined and their terms are carefully restricted. We do not expect there to be any spill-over effect on pensioners. I will write to him separately on draw-down. He should recognise that there is flexibility for pensioners and improved flexibility for those aged over 75. The amount that pensions can draw down depends on not only gilt yields but how much has been drawn down in the past and, above all, on the investment performance of the funds in which the pensions are invested.