Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer of 27 February 2020 to Question 18425 on Pensions: War Widows; if he will make an assessment of (a) the potential merits and (b) compliance with financial legislation of introducing ex gratia awards of compensation of sacrifice made to the estimated 265 war widows whose pensions were withdrawn on remarriage or cohabitation and have not been restored.
Answered by Steve Barclay
In 2014, the Government made prospective changes to the Armed Forces Pension Scheme (AFPS) and War Pension Scheme (WPS). These provided that any Military Widow(er) who remarried or cohabited from 1 April 2015 onwards would retain their pension for life. There was no underlying assumption that those who had lost their pension on remarriage or cohabitation prior to these reforms should divorce or separate from their partner.
The Government currently has no plans to reinstate war widow(er)s pensions with retrospective effect. The Government’s policy presumption is that changes will not be made retrospectively. This policy is the foundation for keeping public service pensions sustainable.
‘Pensions for life’ for surviving widow(er)s and civil partners were introduced across most public service pension schemes from the late 1990s to the late 2000s, with prospective effect. Existing members of pension schemes who were accruing pensions were usually given the option to remain on former schemes or move across to new schemes.
Survivors’ pension entitlements are still subject to cessation if the survivor remarries or cohabits under the rules of many legacy public service pension schemes. Examples of such schemes are: the Principal Civil Service Pension Scheme ‘Classic’ section, the Police Pension Scheme 1987, the Firefighters’ Pension Scheme 1992, and, for members whose service ended before April 2008, the NHS Pension Scheme 1995 section and, for members whose service ended before 2007, the Teachers’ Pension Scheme.
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer of 27 February 2020 to Question 18425 on Pensions: War Widows, which groups other than war widows have had pensions withdrawn on (a) cohabitation and (b) remarriage.
Answered by Steve Barclay
In 2014, the Government made prospective changes to the Armed Forces Pension Scheme (AFPS) and War Pension Scheme (WPS). These provided that any Military Widow(er) who remarried or cohabited from 1 April 2015 onwards would retain their pension for life. There was no underlying assumption that those who had lost their pension on remarriage or cohabitation prior to these reforms should divorce or separate from their partner.
The Government currently has no plans to reinstate war widow(er)s pensions with retrospective effect. The Government’s policy presumption is that changes will not be made retrospectively. This policy is the foundation for keeping public service pensions sustainable.
‘Pensions for life’ for surviving widow(er)s and civil partners were introduced across most public service pension schemes from the late 1990s to the late 2000s, with prospective effect. Existing members of pension schemes who were accruing pensions were usually given the option to remain on former schemes or move across to new schemes.
Survivors’ pension entitlements are still subject to cessation if the survivor remarries or cohabits under the rules of many legacy public service pension schemes. Examples of such schemes are: the Principal Civil Service Pension Scheme ‘Classic’ section, the Police Pension Scheme 1987, the Firefighters’ Pension Scheme 1992, and, for members whose service ended before April 2008, the NHS Pension Scheme 1995 section and, for members whose service ended before 2007, the Teachers’ Pension Scheme.
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer of 12 February 2020 to Question 13939, what assessment he has made of the implications for his Department's policies on withdrawn pensions of the potential reinstatement of pensions to war widows who lost them on remarriage or cohabitation; which groups other than war widows have had pensions withdrawn; and if he will make an assessment of the potential merits of restoring war widows’ pensions to war widows who divorce their subsequent spouses and then remarry them.
Answered by Steve Barclay
It has been the policy of successive Governments that changes to public service pension and compensation schemes should not be applied retrospectively where benefits have already been awarded. This principle is a foundation for keeping the schemes sustainable and given this, the Government currently has no plans to reinstate war widow(er)s pensions with retrospective effect.
‘Pensions for life’ for surviving widow(er)s and civil partners were introduced across all public service pension schemes during the late 1990s – early 2000s, with prospective effect. Existing members of pension schemes who were accruing pensions were usually given the option to remain on former schemes or move across to new schemes.
However, in 2014, the Government made prospective changes to the Armed Forces Pension Scheme (AFPS) and War Pension Scheme (WPS). These stated that any Military Widow(er) who remarried or cohabited from 1 April 2015 onwards would retain their pension for life. This change was welcomed by campaigners, including the War Widows Association (WWA), who recognised at the time that such changes would not be applied retrospectively.
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what discussions he has had with Cabinet colleagues on the consistent application of the principle of retrospectivity in the cases of the (a) loan charge and (b) war widows' pension.
Answered by Jesse Norman - Shadow Leader of the House of Commons
The Loan Charge is not retrospective as it is a new charge on disguised remuneration loan balances which were outstanding at 5 April 2019.
However, Sir Amyas Morse’s independent Review recommended that the Loan Charge should be applied to disguised remuneration loans which were entered into on 9 December 2010 or afterwards, as the law about the tax treatment of these loans was clear from this date. The Government accepted this recommendation.
It has been the policy of successive Governments that changes to public service pension and compensation schemes should not be applied retrospectively where benefits have already been awarded. The Government currently has no plans to reinstate war widows’ pensions with retrospective effect.
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent assessment his Department has made of the risk of suicide among people subject to the 2019 Loan Charge.
Answered by Jesse Norman - Shadow Leader of the House of Commons
The Government published a report on the loan charge in March 2019. The report was required by section 95 of Finance Act 2019, but goes wider than the review set out in legislation, explaining the rationale for the charge and considering its impacts. The report also provides information on how HM Revenue and Customs support those affected by the loan charge, including the introduction of a dedicated helpline. The report is available online at:
www.gov.uk/government/publications/report-on-time-limits-and-the-disguised-remuneration-loan-charge
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent estimate his Department has made of the numbers of (a) people with closed tax years who have been found liable for the 2019 Loan Charge and (b) promoters of loan schemes subject to the 2019 Loan Charge that have been convicted of criminal offences related to those loan charges.
Answered by Jesse Norman - Shadow Leader of the House of Commons
The information requested is not available. HMRC are working through the settlement process with those Disguised Remuneration users who came forward to settle their tax affairs before 5 April 2019.
The loan charge was announced in Budget 2016, and scheme users who chose not to repay the outstanding loan or agree a settlement with HMRC by 5 April 2019 are now liable for the loan charge and should report it as part of their 2018-19 tax liability.
To date, no promoters of disguised remuneration (DR) schemes have been convicted of criminal offences related to DR schemes. There are no criminal offences specific to the promotion of mass marketed tax avoidance schemes, but HMRC may conduct a criminal investigation into an individual’s actions when, for example, reliance is placed on a false or altered document, or if material facts are misrepresented. For example, last month six individuals were arrested on suspicion of promoting fraudulent loan charge arrangements.
Since the formation of HMRC’s Fraud Investigation Service on 1 April 2016, more than 20 individuals have been convicted for offences relating to arrangements which have been promoted and marketed as tax avoidance schemes, resulting in over 100 years custodial sentences. A significant number of avoidance scheme promoters are currently under criminal investigation by HMRC.
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will suspend the 2019 Loan Charge and associated settlements and launch an independent review of the effects of that charge on people subject to it; and if he will make a statement.
Answered by Jesse Norman - Shadow Leader of the House of Commons
Disguised remuneration schemes are contrived arrangements that use loan payments in place of ordinary remuneration, usually through an offshore trust, with the purpose of avoiding tax. These loans are no different to normal income in their purpose and effect, and HMRC’s position is that they are, and have always been, taxable.
In accordance with an amendment to the Finance Act 2019, the Government published a report into disguised remuneration schemes. This can be found online at: www.gov.uk/government/publications/report-on-time-limits-and-the-disguised-remuneration-loan-charge. The Government has no plans to review the policy.
HMRC offers a range of taxpayer support services, both directly and through independent organisations, and would strongly encourage anyone who is affected by the charge to contact them and discuss their situation.
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, what his policy is on enabling pensioners who were obliged to buy annuities to transfer their investment into alternative financial vehicles; and if he will make a statement.
Answered by Simon Kirby
In April 2015, the Government introduced the pension freedoms to give individuals greater flexibility in how they access their pension savings (from the age of 55) by removing the obligation for people to buy an annuity upon retirement. However, these flexibilities did not apply to those individuals who had already purchased an annuity.
In order to extend the flexibilities to these individuals, at the March Budget 2015 the Government announced its intention to remove the restrictions on the sale of existing annuities and to create the conditions for a secondary market in annuities to develop. The Government expected that for most people continuing to hold their annuity would be the right decision, but wanted to give people choice over how they use their money.
However, as the policy developed it became increasingly clear that consumers would have received poor value for their income streams and the conditions to allow a vibrant and competitive market to emerge, with multiple buyers and sellers of annuities, could not be created with sufficient consumer protections. In these circumstances the Government concluded that it would not be in consumers’ interests to continue with this policy. The Government announced in October 2016 that it would no longer be continuing with proposals for a secondary market in annuities.
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, what assessment his Department made of the viability of the secondary annuities market, before its announcement of a scheme to enable pensioners to sell their annuities.
Answered by Simon Kirby
Prior to announcing proposals for a secondary market in annuities, the Government consulted a broad evidence base to understand how this market might operate. This includes modelling estimates of how many annuity holders might sell their annuity, and a consideration of the views expressed by annuity providers and other potential market participants.
Asked by: Julian Lewis (Conservative - New Forest East)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, what discussions his Department had with representatives of the annuities industry before taking the decision to (a) allow the sale of annuities and (b) revoke that policy; and when did such discussions take place.
Answered by Simon Kirby
Following the Chancellor’s announcement of pension freedoms at Budget 2014, several organisations contacted the Government to suggest ways these flexibilities could be extended to existing annuity holders. These suggestions led to HM Treasury having discussions with a range of potential market participants, including annuity providers, about the prospect of a secondary market in annuities. These discussions culminated in the announcement at March Budget 2015 that the Government would create the conditions to allow a secondary market in annuities to develop.
Throughout the development of the policy the Government continued to engage extensively with the pensions and investment industry, consumer groups and financial regulators on how to create a competitive secondary market in annuities.