New Clause 2 - Pension flexibility: Treasury analysis

Part of Taxation of Pensions Bill – in a Public Bill Committee at 3:00 pm on 18 November 2014.

Alert me about debates like this

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury) 3:00, 18 November 2014

My hon. Friend has highlighted some of the reasons why it is important to have that analysis and risk assessment done. I am sure that with all the resources available to the Treasury, it will have considered this—again, I am being generous to the Minister and the Government. I am sure that they have done all the work and considered all these issues and that they have answers to the questions about the potential impact if pension funds are not able to invest in infrastructure, but I would like to understand the thinking and find out whether they uncovered any concerns or any changes that might need to be made in the future.

I mentioned buy-to-let. One concern that was raised at the outset is that if people decide, for example, to take their pension pots and invest in property, how might that skew the housing market? What are the wider implications? How does that skew the whole way of procuring and investing in infrastructure for the long term? These are all things that matter to the broader UK economy and although they may not appear to be directly within the wording of the Bill, none the less, there is a potential impact arising from the Bill which has not yet been explored.

I will briefly mention some of the other written evidence contributions. I have spoken about the impact on the broader economy, the insurance industry and so on, but some of the issues relate more to individuals. A number of submissions were made about the need for the new rules to be preceded by education and promotion campaigns. For example, the Association of Taxation Technicians, which is in the business of making these schemes work and providing information on them, talks about the need to provide information, in particular real-time information on the reporting requirements. That is to do not so much with the broader economy, but with the financial impact on individuals. In its submission, the ATT said that it remains

“deeply concerned about the impact on the income tax position of pensioners considering taking benefits under the new regime. A system based on many end-of-year reconciliations being carried out with no legislative framework or structure—such as there is, for example with the self-assessment system where assessments are appealable”— it makes the point that P800s are currently not appealable—

“will only lead to chaos and misery for very many frustrated pensioners.”

I am in generous mode, so let me say that I am sure that that is not what the Minister or the Government intend. None the less, if the people who will operate the system and provide guidance, information and advice are raising concerns, we must listen to them.