Finance Bill — New Clause 9 — Publication of Treasury Analysis on Impact of Greater Flexibility in How People May Draw Down Pensions — 2 Jul 2014 at 14:00

The majority of MPs voted to require the publication of any analysis prepared by the Treasury prior to the publication of the 2014 Budget in relation to the expected impact of proposed changes to the law on pensions aimed at giving greater flexibility to individuals in the way they draw down their pensions.

The proposed new clause rejected in this vote stated:

• ‘(1) The Chancellor of the Exchequer shall, within six months of this Act receiving Royal Assent, publish and lay before the House of Commons any analysis prepared by the Treasury prior to the publication of Budget 2014 relating to the impact of changes made by sections 39 to 43 of this Act to schedules 28 and 29 to the Finance Act 2004.
• (2) The information published under subsection (1) must include—
• (a) any assessment made of the impact of the provision for independent face to face guidance on the 2004 Act;
• (b) the distributional impact, by income decile of the population, of changes made by sections 39 to 43 of this Act;
• (c) a behavioural analysis; and
• (d) the financial risk assessment.”

The sections 39 to 43 of this Act referred to all relate to pensions and are as follows:

• 39. Pension flexibility: drawdown^[1]

This provides for an increase in the permitted pension drawdown rate from 120% to 150% an equivalent annuity, but reduced the annual amount of drawdown which makes people subject to this cap to £12,000 from £20,000

• 40. Pension flexibility: taking low-value pension rights as lump sum^[2]

This clause provides for an increase to £30,000 (up from £18,000)in the maximum total pension savings that individuals can have before they are no longer permitted to receive lump sums from their registered pension schemes under trivial commutation rule.

• 41. Transitional provision for new standard lifetime allowance for 2014-15 etc^[3]

This provides for the introduction of an additional provision relating to the transition to a new lower individual lifetime allowance for pensions savings, any excess to which is subject to the lifetime allowance charge.

• 42. Taxable specific income: effect on pension input amount for non-UK schemes^[4]

This provision seeks to correct an anomaly resulting from the way in which the employment income tax legislation interacts with the treatment of employer contributions to relevant non-UK schemes.

• 43. Pension schemes^[5]

This provision seeks to toughen regulation on schemes offering people access to their pension savings earlier than permitted by Parliament.

The schedules of the Finance Act 2004 which the above sections sought to amend to are:

• Schedule 28 titled Registered pension schemes: authorised pensions—supplementary^[7]

and

• Schedule 29 Registered pension schemes: authorised lump sums—supplementary^[8]

These set a series of rules for registered pensions schemes.

==

• [1] Parliament's webpage on the Finance Bill 2013-14 to 2014-15
• [2] Page of amendment papers for consideration of the Finance Bill 2013-14 to 2014-15 on 2 July 2014
• [3] Section 39 of the Finance Bill as at the time of the vote
• [4] Section 40 of the Finance Bill as at the time of the vote
• [5] Section 41 of the Finance Bill as at the time of the vote
• [6] Section 42 of the Finance Bill as at the time of the vote
• [6] Section 43 of the Finance Bill as at the time of the vote
• [7] Schedule 28 of the Finance Act 2004
• [8] Schedule 29 of the Finance Act 2004
• [9] Explanatory notes to the Finance Bill

Debate in Parliament | Source |