Written question asked by Gerald Howarth (Conservative) on Thursday, 15 January 2004, in the House of Commons. It was due for an answer on Wednesday, 21 January 2004. It was answered by Ivor Caplin (Labour) on Wednesday, 21 January 2004 on behalf of the Ministry of Defence.

Ministry of Defence

Question: To ask the Secretary of State for Defence, what arrangements he intends to make in relation to the Armed Forces Pension Scheme and compensation to ensure that (a) a beneficiary is guaranteed five years' worth of payments notwithstanding earlier death and (b) lump sum payments to give effect to such guarantee are not taxed at a 35 per cent. rate. (Corrected on 3 February 2004 at 417 c30WS). - Inc ref to "Simplifying the taxation of pensions: the Government's proposals", 10 December 2003.

Answer: Mr. Gerald Howarth: To ask the Secretary of State for Defence what arrangements he intends to make in relation to the Armed Forces Pension Scheme and compensation to ensure that (a) a beneficiary is guaranteed five years' worth of payments notwithstanding earlier death and (b) lump sum payments to give effect to such guarantee are not taxed at a 35 per cent. rate. [149152] Mr. Caplin: The decision of the new Armed Forces Pension Scheme includes a provision to allow a lump sum payment to a spouse or partner of up to five years' pension payments, less the lump sum received on retirement and pension payments up to the date of death, if a member dies after retirement but within five years of the pension coming into payment. The Government propose in "Simplifying the taxation of pensions: the Government's proposals", published on 10 December 2003, that such payments should be taxed at 35 per cent. The Ministry of Defence will be considering the benefit proposal further in the light of the taxation arrangements.

Secondary information