Pensions Strategy

Debate between Julian Lewis and Steve Webb

Thursday 20th March 2014 Commons Chamber

[Steve Webb]

The beauty of theses proposals is that individuals will choose: if they want to spread their income over their retirement they will pay less tax, and if they bring forward their cash they will pay more tax. We think people will take advantage of those freedoms, which will bring forward taxation revenue in the shorter term, and there will be a reduction later on. People will be able to make free choices, something I hope the hon. Gentleman is in favour of.

[Dr Julian Lewis (New Forest East) (Con)]

I am genuinely not sure what the previous position was on whether the pension pots of elderly people going into residential care contributed towards the total assets they were allowed to retain before they got help from the state. If that was separate and did not count, will the fact that pension pots can now be turned into cash disadvantage people going into residential care in terms of the assets they can retain, or will the situation remain unchanged from their point of view?

[Steve Webb]

The interaction between these measures and the funding of long-term care is important. There are various rules. If someone takes their pension pot as income, it will be counted as income in the means testing for residential care. If they have capital assets, we assess them on a different basis. We have to make sure that these measures are joined up with our policy on long-term care so that we have the right outcome. What we hope will happen is that new financial products will allow people to use their pot to possibly get care insurance as well. The industry has asked for this; now it has to raise its game.