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Finance (No. 2) Bill

I shall make a couple of brief observations in support of new clause 3, proposed by my hon. Friend the Member for Fareham (Mr. Hoban). His concluding comments about the need for consistency and clarity were well made. We are entering a new era for pensions in this country. Following the introduction of A-day, individuals now have the opportunity to accumulate substantial pensions—[Interruption.] Before the hon. Member for Wolverhampton, South-West (Rob Marris) invites me to declare an interest, I will maintain my consistent and clear conduct before the House by declaring that I will be the beneficiary in due course of a personal pension and I am also a member, like everyone else in the House, of the parliamentary pension scheme. I declare that fully for the record. The introduction of the new regime under A-day means that, at the upper end of the pension market, a decision needs to be taken by individuals who are considering whether to add to their pension funds over the coming years. The decision means setting aside potentially significant amounts of money—up to £200,000 in the current year. On my parliamentary salary, it is unlikely for me, but it applies to those who have sufficient income. They have to decide whether or not it is an appropriate repository for their funds. The Government need to deal with the logical inconsistency of having established the alternative secured pension structure, but allowing some individuals not to have to take out an annuity at the age of 75, while others do. If the Government are paying attention, they need to reflect on whether to relax the compulsory annuitisation regime and allow individuals, on reaching 75, to withdraw income and thereby suffer income tax and, if these people were to die with large residual amounts in their pension fund, whether those amounts should form part of the estate and be taxed under the inheritance tax regime. That would an entirely logical and consistent approach to these larger individual pension amounts and would in no way conflict with the objectives of the Turner commission and subsequent White Paper. I remind Ministers that the White Paper addresses the part of the population that has little prospect of paying inheritance tax and encourages saving among those earning up to £32,000 a year. Such individuals are unlikely to be able to accumulate sufficient assets over their lifetimes to get into the inheritance tax net, which is an objective of the rules on annuitisation. The Government need to look into that as a means of refining the White Paper, which I would greatly welcome. Like my hon. Friend the Member for Fareham, I do not anticipate that the Government will accept the new clauses, but they need to reflect on these issues as the White Paper becomes an Act over the next year. By next year, I expect the Government to have reflected on these provisions and to introduce them into the Budget.