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Lord McKenzie of Luton

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McKenzie of Luton, Lord (7)

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My Lords, that is a very good question. I understand that the concept is that fine wines may increase in value over time and, if held in a pension scheme, in due course, if realised, could provide the wherewithal to pay a pension. I think that that is the underlying concept, as is the case with any asset. The tax rules need to be taken into account. Holding such wines outside a pension scheme might generate some capital gains tax liability in due course. Put into a pension scheme they will engender some tax when they are taken out as a pension. Personally, I am more in favour of keeping fine wines in the kitchen rather than in a pension scheme.
Answered by
Lord McKenzie of Luton (Labour)
Type
Oral answers to questions
Date
16 November 2005
Reference
675 c1066-7
House
House of Lords
My Lords, one could ask what regulation was in place before that? What the Government have gone through recently has been a major simplification of the tax regime, to make sure that there are common rules relating to investments and contributions that exist right across the piece. The Government have done their bit—it has been ignored by previous governments for far too long.
Answered by
Lord McKenzie of Luton (Labour)
Type
Oral answers to questions
Date
16 November 2005
Reference
675 c1067
House
House of Lords
My Lords, I do not believe that the response is complacent. As the noble Lord has highlighted, part of the problem is that this has been built up in parts of the press although from my more recent reading of some of the financial press there is a more effective and sober assessment of what these things entail. The reality is that if people put these assets into a pension scheme they are taking away from their own individual ownership at the moment. If there is use of things such as second homes, there will be a tax charge on people using it unless a full rent is paid for doing so. These are some of the matters which have not been properly explained in the press and it is important that we continue to make people aware of that in whatever way we can which is why these consequences have been set out on the website of the HMRC and the FSA. But the Government are working with SIPP providers to ensure that consumers are protected as fully as they can be. The gap is unfortunate but we need to make sure that, if there is going to be regulation, there is a proper process which is undertaken so that the regulation is effective. We cannot just put a regulation in place overnight and it is right that the FSA is given a proper opportunity to consult on changes to its rule book so that when the regulation—which is not just about SIPPs but concerns the regime generally—comes into force it is effective and has wide support.
Answered by
Lord McKenzie of Luton (Labour)
Type
Oral answers to questions
Date
16 November 2005
Reference
675 c1067
House
House of Lords
My Lords, we have already been through a simplification process which went through Parliament with all-party support. I thought that that was widely accepted as the right thing to do by the industry, by savers and by all parties in this House and the other place. But it is important to the huge issues that surround pensions that we seek to build a consensus, which is why the Government are looking forward to the final report of the commission in which the noble Lord, Lord Turner, has been involved to which we will respond appropriately in due course. Consensus is important. We are dealing with long-term issues.
Answered by
Lord McKenzie of Luton (Labour)
Type
Oral answers to questions
Date
16 November 2005
Reference
675 c1066
House
House of Lords
My Lords, pension simplification replaces the numerous existing tax regimes for pensions, creating a single unified regime for tax-privileged pension savings, including a common set of investment rules. The Government are also consulting on widening the definition of persons eligible to establish a tax-privileged pension scheme and extending the existing regulatory regime. Subject to consultation, these proposals, designed to open up the personal pension market within a full regulatory framework, will be in place from April 2007.
Answered by
Lord McKenzie of Luton (Labour)
Type
Oral answers to questions
Date
16 November 2005
Reference
675 c1065
House
House of Lords
My Lords, the Government are aware of that gap and the concerns that have been expressed, and we are keen to work with the pensions industry to find ways to ensure that consumers are provided with advice for making decisions about investing in SIPPs. Guidance is already available on the FSA and HMRC websites, but I should stress that these investments are not a new class of privileged investments for pension schemes. Most pension schemes already have these investment opportunities. Some 15 million people are already in schemes that are covered by them, but there has been a great deal of unjustified hype about these proposals and we think that, for many people, putting such assets into SIPPS would be inappropriate.
Answered by
Lord McKenzie of Luton (Labour)
Type
Oral answers to questions
Date
16 November 2005
Reference
675 c1065-6
House
House of Lords
Why self-invested pension plans (SIPPs) will be allowed to invest in assets, including individual houses and fine wines, from 6 April 2006 when SIPPs will not be regulated before 2007.
Asked by
Lord Oakeshott of Seagrove Bay (Liberal Democrat)
Oral questions - Lead
Status
Answered
Date
16 November 2005
Reference
675 c1065
House
House of Lords