Treasury reveals pensions concessions

Economic secretary Melanie Johnson revealed the possibility of a concession during the debate on stakeholder pension plans in the Finance Bill Committee in the Commons.

She told MPs full concurrency was ‘unfocused and does not represent good value for money’ for the government.

The concession would give more tax relief to high earners already receiving relief and encourage providers to cherry-pick among the rich rather than persuading moderate earners to increase their pension cover, she told MPs.

Johnson said, however, that the Treasury would continue to consider ‘whether limited concurrency is appropriate’ and would introduce any proposed change at a later stage during consideration of the Bill.

She said the government was also considering what to do about the requirement for money-purchase scheme holders to purchase annuities at the age of 75 at a time of a shortage of long-dated gilts.

But she declined Tory pressure to announce an end to the requirement, suggesting a number of issues involved would be resolved in time for next year’s budget, with announcements ‘at appropriate times’.

Shadow finance minister Howard Flight said the Tories are ‘committed to abolishing the obligation’ which he understood the government were considering delaying until the age of 80.

He said the issue had arisen because of the drying up of the supply of long-dated gilts with artificially low interest rates and high annuity rates – warning that the issue ‘cannot be ducked for much longer’.

Tory MP Oliver Letwin warned that annuity rates could fall to a level that became a scandal next year and an excessive scandal the year after, with ghastly difficulties for those caught in the trap similar to those of the mis-selling scandal.

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