§ 12. Helen Jackson (Sheffield, Hillsborough)What proposals he has to reduce the tax liabilities of pensioners. [78235]
§ The Financial Secretary to the Treasury (Ruth Kelly)We will increase the age-related personal allowances above inflation. As a result, from 2003–04, no pensioner aged 65 or over will pay tax unless their income reaches £127 a week.
§ Helen JacksonI am grateful to the Minister for her answer. Does she recognise that pensioners who have saved throughout their working life or paid into an occupational pension fully support the proposal for a pension tax credit, which may reduce many pensioners' tax liability, but the level of awareness about what the proposal may mean for them in the next tax year is very low? What will my hon. Friend do to ensure that there is a significant increase in that awareness over the next six months?
§ Ruth KellyI thank my hon. Friend for her question. My right hon. Friend the Secretary of State for Work and Pensions is fully aware of the need to promote the eligibility for the pension credit as widely as possible. That will be done, first, by ensuring that people know in good time that they may be entitled to it. Secondly, to ensure maximum take-up, the Government will run a wide-ranging campaign in which we will not only work with the media but avail ourselves of the knowledge of local agencies and partners.
§ Mr. David Cameron (Witney)Given that interest rates and annuity rates are very low and that the Government have made a raid on pension funds, does the Minister think that there is any merit in cutting the tax rate on pensioners' savings, particularly as it is usually money that they saved during their working life and on which they have paid tax?
§ Ruth KellyMost pensioners pay no income tax at all. Indeed, this Government introduced the 10p tax band, which was raised above the rate of inflation in the last Budget, taking another 3 million pensioners out of tax. I have already explained to the House that we are increasing the age-related personal allowances, and, next year, bringing in the pension credit to reward low-income pensioners. We are maximising the incomes of pensioners, particularly those on low incomes. Unlike the Conservative party, the Government are putting the abolition of pensioner poverty at the forefront of our efforts to increase pensioner incomes.
§ Fiona Mactaggart (Slough)Does my hon. Friend agree that there is widespread confusion among pensioners and the rest of us, who will be pensioners one day, about how pensions are paid for? I refer, for example, to the deferred taxation on pension contributions and the working of the pension tax credit. Will she run a public education campaign designed to inform not only current but future pensioners about the 429 financing and taxing of pensions so that people can plan properly for their future, which many currently do not do?
§ Ruth KellyMy hon. Friend makes an excellent point. At the moment, the complexity of the pension regime—not just in the rules for operation of pension funds but in the taxation system—makes it extremely difficult for low-income people to access financial advice, and even for those who can access financial advice to be fully aware of their opportunities and obligations in the future. We are determined to simplify the system to maximise the information available to individuals and employers to exercise their responsibilities. That is why we shall publish later this year a Green Paper that will open up broad discussion about how people can achieve a secure and adequate retirement income. That is also why, in that Green Paper, we will report on the three reviews that we have commissioned: the Ron Sandler review, which looks at the role of saving in general; the Pickering review from the Department for Work and Pensions, which looks at pension simplification and the rules attached to that; and the review of pension taxation that has been undertaken by the Inland Revenue.