RETURN OF CONTRIBUTIONS ON DEATH OF MEMBER (Hansard, 14 July 1987)

§ Sir Brandon Rhys Williams
Will my right hon. Friend enlighten me on a point that I raised on a similar clause in the Finance Bill before the election? At that time, unless I am much mistaken, I tabled a probing amendment at the end of subsection (2) to add the words whichever provides the greater amount", 1045 the object being to elucidate what appears to be somewhat ambiguous. Subsection (2) says: the lump sum must represent no more than the return of contributions, together with reasonable interest on contributions or bonuses out of profits. I may not have understood that correctly, but it seems to me that an option is available there and I would not want it to be possible for the option to be exercised—if I have read it correctly—in such a way that it is a disadvantage to the beneficiary. Perhaps my right hon. Friend could explain that or, if I have misunderstood the way that the clause ought to be read, perhaps he would say so.

§ Mr. Blair
Perhaps I can assist. I do not think that there is a difficulty in clause 26 of the type that the hon. Gentleman suggests. That is partly because it seems that subsection (2) will simply ensure that a lump sum does not represent any more than the return of the contributions together with reasonable interest on the contributions or bonuses out of profits. It is almost a form of anti-avoidance provision to ensure that what is returned is not more than what should have gone into the scheme under the rules. As such, the clause is necessary to ensure that the rules of the scheme are not abused.

§ Mr. Norman Lamont
The hon. Member for Sedgefield (Mr. Blair) is perfectly correct and he has summed up the position. No surplus will arise in this instance and we are talking about two different forms of contract—one unit linked and the other guaranteeing the annuity.