Pensions: Tax Relief

Debate between Lord Young of Cookham and Lord Goddard of Stockport

Tuesday 6th December 2016 Lords Chamber

[Lord Goddard of Stockport]

To ask Her Majesty’s Government what current plans they are considering with regard to pensions tax relief; and whether they are planning to introduce a pensions ISA.

[Lord Young of Cookham (Con)]

My Lords, the Government held a consultation on pensions tax relief last year. Responses to the consultation showed that there was no clear consensus for reform. That lack of consensus, combined with the ongoing rollout of automatic enrolment, led the Government to conclude that it was not the right time for fundamental reform. As with all aspects of the tax system, tax relief for pensions is kept under review.

[Lord Goddard of Stockport (LD)]

I thank the Minister for that Answer, but does he agree with me that pensions are very complicated? One way to resolve that problem could be with flat-rate tax relief for all, the two-for-one model. Some 80% of employers think it could encourage employees to save and invest more. It would work across defined pension contributions and would also be sustainable, giving both short-term and long-term benefits to the Treasury, compared with the costs that fluctuate now.

I have to say that pensions are a bit like the House of Lords: when you are young you do not understand them and do not want to get involved, and when you do get involved they are very complicated, but roll on 40 years and you are glad you have a pension, you are glad you invested it and you hope it will look after you through your remaining years—a bit like my noble friends in this House.