The Treasury has refused to reveal the fiscal calculations behind the crackdown on alternatively secured pensions.
In a recent Parliamentary Questions session, Conservative Shadow Work and Pensions Secretary Philip Hammond asked Chancellor Gordon Brown to place Treasury working papers relating to the fiscal impact of people choosing to take Asps in the House of Commons Library.
In a written response, Treasury Chief Secretary Ed Balls said this would be inappropriate and “prejudicial to the frank and candid discussions that are an essential part of policy development”.
He said that widespread use of Asps would have an additional cost to the Exchequer due to deferral of tax charges where pensions are not used to provide an income at retirement. He reverted to figures in the pre-Budget report which claimed the overall Exchequer costs of pension simplification, including Asps, remains at 25m for 2006/7, rising to 250m in 2010-11.
The Government provoked anger in the pre-Budget report by proposing a punitive 82 per cent tax charge on death benefits on Asps to stop people avoiding tax despite calculations from Hargreaves Lansdown which indicated that the tax take for Asps is higher than for annuities.
Aegon head of pensions development Rachel Vahey says: “It is disappointing that the Government seems to be letting flawed logic influence its decision on the future of Asp. If left alone, Asps could benefit the Government and engage people in pension saving by giving them flexibility on how they spend their pension pot.”