HANSARDCommons15 Dec 20222 contributions
Treasury
Life Insurance Taxation
The Government are announcing the following measure— of which there are two components—which will take immediate effect from today.
The first part of the measure applies to re-insurers of a specific type of long-term insurance business known as basic life assurance and general annuity business (BLAGAB). It addresses a possible tax mismatch in the life insurance rules where re-insurance precedes a transfer of BLAGAB. In this situation the measure eliminates the possibility of a mismatch by classifying the re-insured business as BLAGAB in the hands of the re-insurer. This will protect Exchequer revenues needed to fund vital public services.
The second part of the measure addresses an industry concern that the current scope of section 92 of the Finance Act 2012 may be unnecessarily wide and is blocking commercial transactions. It amends that section so that it does not apply where substantially all the insurance risks of a book of BLAGAB are assumed by a re-insurer.
[HCWS453]
Public Service Pensions and Judicial Offices Act 2022: Treasury Directions
The Government are committed to public service pensions which are fair to public sector workers. In 2015 (2014 for local government workers in England and Wales), reforms were made to public service pension schemes in England and Wales to provide workers with fairer pensions arrangements and to make the pension schemes more sustainable and affordable for the longer term. These reforms followed the recommendations of the Independent Public Service Pensions Commission. The Government believe the 2015 changes to public service pensions balanced the interests of public service workers, employers and taxpayers fairly.
However, when the reforms were introduced, they provided “transitional protections” which allowed members who were close to retirement to remain in the previous scheme (the legacy scheme). In December 2018, the Court of Appeal found that these transitional protections in the judicial and firefighters’ pension schemes gave rise to unlawful discrimination (the McCloud and Sargeant case).
The Public Service Pensions and Judicial Offices Act 2022 was enacted to remedy the discrimination identified by the courts. The Act provides a retrospective remedy, such that affected members are treated as if they had always been in the legacy scheme for their period of remediable service, as well as providing affected members a choice of which pension benefits they wish to receive for that period when those benefits are put into payment. The detail of the retrospective remedy for affected members will be set out in scheme regulations made under the Act for each affected pension scheme. The retrospective remedy is due to come into force by 1 October 2023.