Corporate Adviser editor John Greenwood was grilled by a panel of MPs over concerns pension freedoms could lead to massive leakage of tax as individuals flush salary through pensions, avoiding huge levels of National Insurance and income tax. (This story was published in October 2014).
Webb questioned a suggestion from Greenwood that £20bn of tax revenue would be lost if everyone over 55 took full advantage of the new flexibilities to avoid NI and tax, and that if even a tenth of that amount were avoided, £2bn would be lost to the Exchequer.
Webb’s questioning, which starts at 15.34.20 on the video, included probing questions about why employees are not using the £30,000 trivial commutation allowance to avoid tax this year.
He also questioned the £20bn figure, which Greenwood said he freely admitted was not 100 per cent accurate, saying he was not a research organisation, but he had asked bodies such as the Institute of Fiscal Studies to comment on the extent of the potential leakage, but they had been unprepared to comment on them. But the minister did not offer any figures of his own as to what the scale of the issue is.
Greenwood pointed to a survey conducted at the Corporate Adviser Summit earlier this month, which showed two thirds of the 39 senior DC consultants considered at least 10 per cent of the £20bn or so tax and NI that could be avoided in 2015/16 would be avoided.