§ Mr. LidingtonTo ask the Chancellor of the Exchequer what is his policy on requiring the National Insurance Contributions Office to pay interest on the late payment of the age-related element of NIC rebates to contracted-out money purchase schemes; how much has been paid in such interest payments for(a) 1997–98, (b) 1998–99 and (c) 1999–2000 to date; and if he will make a statement. [115984]
§ Dawn Primarolo[holding answer 23 March 2000]The National Insurance Contributions Office applies the policy set out in the Inland Revenue's code of practice 1 when paying interest on the late payment of age-related rebates to contracted-out money purchase schemes. However, special arrangements were made for the 1997–98 tax year where payments were made at 0.5 per cent, of the rebate cumulatively for each month of delay after October 1998. The objective was to replace any State Earnings Related Pension benefits foregone at an annual rate of 6 per cent, (the prevailing gilt interest rate).
The 0.5 per cent, payable for the 1997–98 tax year includes both personal pension and money purchase schemes and a separate breakdown for each category is not yet available.
Compensation amounting to £40.9 million has been paid due to the late payment of age-related rebates for the 1997–98 tax year as a result of introducing the 0.5 per cent, addition. To date no compensation has been paid to contracted-out money purchase schemes for the 1998–99 tax year and as we have not yet commenced the processing of 1999–2000 employers end of year returns compensation is not yet an issue for this tax year.