Amendment 17 would require the Government to undertake a review of the effect of the change to the money purchase annual allowance under Clause 7. Before I set out why that review would be unnecessary, I want first to remind Committee members of the background to clause 7, and what it seeks to achieve. The historic pension freedoms introduced in April 2015 have given people with savings in money purchase arrangements greater flexibility to get access to their pension savings. Once a person has accessed their pension savings flexibly, further tax-relieved contributions are restricted to the money purchase annual allowance.

In the autumn statement of 2016, the Government announced that they would consult on reducing the allowance from £10,000 to £4,000, to limit the extent to which people can recycle their pension savings to get extra tax relief—something that the hon. Member for Bootle recognised in his remarks. Following that consultation, the Government concluded that an allowance of £4,000 would be fair and reasonable, restricting the extent to which some individuals can gain from an unfair tax advantage, while still allowing those who have accessed their pension flexibly to rebuild some of their savings.

The changes under clause 7 reduce the money purchase annual allowance from £10,000 to £4,000 with effect from April 2017, to help to ensure that the cost of pension tax relief is fair, affordable and sustainable. That reduction will limit the extent to which pension savings can be recycled to take advantage of tax relief, which is not in the spirit of the pension tax system. The allowance applies to individuals who flexibly access their pension savings or who have already done so.

Amendment 17 would impose a requirement on the Government to undertake a review of the effects of the change, before 30 June 2019, and to lay it before the House. I am afraid that that would be unnecessary; as I have outlined, the decision to reduce the allowance follows extensive consultation with industry and individuals. During that consultation, we received no evidence that particular groups, as a whole, would be disproportionately affected by the change. Indeed, the Government estimate that about 3% of individuals aged 55 and over make annual contributions—from themselves and their employers —of more than £4,000. Of that 3%, significantly fewer people have already accessed their pension savings flexibly, which means that the number affected will be significantly lower.

Across the population more broadly, median defined contribution pension saving is between £2,000 and £3,000 per year—so it is below the £4,000 figure that we have been discussing. Moreover, in our response to the consultation, the Government have already committed to review the level of the allowance in order to ensure that there is no conflict with automatic enrolment policy in the future.

The hon. Member for Bootle asked some specific questions about the kinds of consultation and information that we have made available to those who might potentially be affected, and I can reassure him that the measure has been well publicised. It was, as I have said, announced in the autumn statement 2016, when Her Majesty’s Treasury carried out a 12-week consultation; and the change was confirmed in the 2017 Budget.

Following the announcement of the General Election and the shortened Finance Bill, the Government confirmed that the policy had not changed, and that it would be legislated for at the earliest opportunity in the new Parliament. In addition, registered pension schemes must provide a flexible access statement to individuals within 31 days of their first triggering the money purchase annual allowance. The content of the statement is explained on the gov.uk website. The hon. Gentleman also asked about the cost to the Exchequer. The answer is £70 million per annum.

Providing guidance through information has been a core element of the Government’s pension freedom policies. Indeed, anyone aged over 50 can access Pension Wise for free, and get impartial Government guidance about defined pension contribution options. The Pension Wise website explains the MPAA in connection with flexibly accessing savings, in a number of sections.

The Government are committed to supporting hard-working individuals who want to save through the tax system. This year we have increased the amount of money that an individual can save or invest tax-free through the ISA by the largest ever amount to £20,000, nearly doubling the limit since 2010. As I have outlined, the pension allowances are generous, and the new MPAA remains considerably higher than median contributions.

Reducing the MPAA limits the extent to which pension savings can be recycled, while allowing those who want flexible access to pension savings the opportunity to rebuild some of their savings, should they choose to do so. The Government have consulted on the change and are confident that it is the right decision. I therefore urge hon. Members to withdraw the amendment and I commend the clause to the Committee.