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March 4, 2002

Question written on 04/03/2002

To ask the Chancellor of the Exchequer if he will make a statement on the effects of the abolition of the advance corporation tax credit on future pensions.

Answered by Ruth Kelly

The Government’s package of corporation tax reforms included measures to boost corporate investment by removing tax distortions. The withdrawal of payable tax credits on dividends was just one part of these measures. Pension funds will share in the long-term benefits from these changes to corporation tax. The overall effects of these changes on pension funds and future pensions will depend on a variety of factors, including: the type of scheme paying the pension; the take-up of private pensions; the level of future pension contributions; pension schemes’ asset allocation and investment policies; and investment returns generally.