The Treasury select committee is to demand an explanation from the Government over the way it announced the changes to the pensions death tax.
Chancellor George Osborne announced at the Conservative Party conference last week that the 55 per cent death tax on pensions would be scrapped on inherited defined contribution pensions in drawdown when a member dies befor age 75.
Stock prices of specialist annuity providers fell after national newspapers reported the tax cut would not apply to annuities, but the Government later confirmed the changes would apply to value protected annuities, where policyholders pay a premium to ensure any remaining annuity payments are passed on if they die.
Speaking to Money Marketing, TSC member and Labour MP Andy Love says: “The whole thing is a bit of shambles – undoubtedly the decision to announce it at the Conservative Party conference means it was rushed and therefore the way this was handled was totally unsatisfactory.
“Undoubtedly over the next few months we’ll want to take a very close interest in what happened here to make sure the information that’s fed to the public and the markets is accurate.
“This failure is something that’s affected the markets, affected insurance companies and their valuations and caused quite a bit of turbulence – that was unnecessary. We will want an explanation of what went wrong.”