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Pensions (Taxes)

Volume 587: debated on Tuesday 4 November 2014

The Taxation of Pensions Bill that is currently before the House will reduce tax rates that previously applied if people wanted to withdraw money from their pension flexibly. It will also reduce the 55% tax rate on pension assets when someone dies. These tax cuts will leave people with more of their own money and more choice about how to spend it.

These measures clearly show that we are the party on the side of those who do the right thing, work hard, and save. Does my hon. Friend agree that Labour would adversely affect those people through its new pensions tax plan?

My hon. Friend raises an important point. We often heard Labour Members say that they were going to oppose a tax cut for hedge funds. It turned out that it was not a tax cut for hedge funds but a tax cut that benefits pension funds, yet they want to reverse it.

While the Minister is talking about cutting tax on pensions, will he spare a thought for the 4,000 members of the British Midland International pension scheme who lost considerable sums of pension entitlement when their airline was taken over? Lufthansa offered them substantial compensation, but Her Majesty’s Revenue and Customs is now insisting on taxing it. What is he doing about that?

I am grateful for the hon. Gentleman’s question and I have met a couple of hon. Members to discuss the issue. Her Majesty’s Revenue and Customs needs to apply the law as it currently stands, but that does not give it a great deal of discretion. This is a complicated matter and I am more than happy to set out details in writing for the hon. Gentleman.

Given the significant number of pensioners in my Fylde constituency, may I welcome the sweeping reforms announced by the Chancellor earlier this year? What plans will be put in place to make sure that those pensioners who access their own money get sound advice?

As my hon. Friend will be aware, we have set out our plans for a guidance guarantee. My right hon. Friend the Chancellor has announced that we are working with Citizens Advice in particular to provide a face-to-face service. Good progress is being made, so that service will be available in good time for next April.