Clause 15 - MPs’ pension scheme etc: rectification of discrimination

Finance Bill – in a Public Bill Committee at 10:15 am on 16 January 2024.

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Question proposed, That the clause stand part of the Bill.

Photo of Nigel Huddleston Nigel Huddleston The Financial Secretary to the Treasury 10:30, 16 January 2024

Clause 15 makes changes in relation to the occupational pensions of Members of Parliament, Members of the Welsh Senedd and Members of the Legislative Assembly in Northern Ireland. It will ensure that these groups receive tax treatment comparable to the wider public sector when their pension schemes remedy age-related unfairness in past pension changes.

In 2015, the Government reformed public service pensions and offered transitional protections to those closest to retirement. The Court of Appeal later concluded that the provision of protections for older members but not younger members was discriminatory on the basis of age. The Government therefore introduced legislation to remedy this in 2022. The pension schemes for Members of Parliament, Members of the Welsh Senedd and Members of the Legislative Assembly were similarly reformed between 2015 and 2016, but the court judgement did not apply to them because of the distinct legal underpinnings of the other pension schemes. To ensure fairness, these schemes are voluntarily providing remedies to eliminate any age-related unfairness in line with broader public service pensions.

The remedies provided by the schemes are not retrospective for tax purposes. Therefore, legislative changes are needed to prevent members from incurring adverse tax consequences. The clause will allow the Government to make technical changes in secondary legislation. This will put members of these schemes in the tax position that they would have been in if any age-related unfairness had not occurred.

Photo of James Murray James Murray Shadow Financial Secretary (Treasury)

You beat me to it, Mr Paisley. I do not think this change will affect me personally, given when I was elected, but with an abundance of caution I declare an interest, as I am sure all Members would.

As the Minister explained, clause 15 provides technical updates to pension tax legislation related to elected representatives. It will provide a new power to make tax regulations in secondary legislation to, according to the Government’s explanatory notes,

“redress payments for age related unfairness caused by past changes to the pensions of members of Parliament, members of the Senedd and members of the Northern Ireland Assembly.”

The changes are also designed to be capable of having a retrospective effect to ensure that individuals are, as far as possible, put in the tax position they would have been in had the discrimination not occurred. The Opposition will not be opposing this measure.

Photo of Nigel Huddleston Nigel Huddleston The Financial Secretary to the Treasury

I thank the hon. Gentleman for his comments. Indeed, I believe most of those affected here in Parliament were elected prior to 2015. There has been consultation with the Independent Parliamentary Standards Authority and others on these changes. It is a matter of fairness to make sure this is aligned with the broader public sector.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill.