Mike Penning has welcomed the Pensions Reform Minister, Mike O'Brien's support for Dexion pensioners who are facing a 40% tax bill on their backdated compensation.

Hemel Hempstead MP Mike Penning has welcomed an announcement from Pensions Reform Minister, Mike O’Brien, that he is supporting Dexion pensioners who are facing a 40% tax bill on their overdue compensation. As the backdated compensation will be paid as a lump sum they will fall into the higher 40% tax bracket. This would not have been the case had they received their compensation year on year as they should have done.

In a pre-arranged question to the Minister in the Commons yesterday Mike Penning, who has been working with the Work and Pensions Department on this issue, asked:

“Will he confirm that the Treasury will not—as a result of Government delay in giving my constituents the compensation that they deserve—take up to 40 per cent. tax from my constituents who have got their pensions through FAS?”

Pensions Reform Minister, Mike O’Brien then told MPs:

”The hon. Gentleman will be pleased to know that, this morning, I was able to talk to his constituent, Mr. Humphries, and tell him that we hoped to make an announcement today that the Treasury had agreed that the lump sum payments to be paid to various FAS recipients can be taxed in a way that means that most of those people—it depends on their tax circumstances—will not be pushed into the higher tax bracket as a result of those lump sum payments, so they can spread their tax payment over time.”

Speaking afterwards Mike Penning said: “I am pleased that the Minister is supporting the Dexion pensioners on this issue. We need to keep the pressure on the Treasury to see sense and find a way to prevent these long-suffering people from losing out again. I very much hope that common sense will prevail in the end.”

Full text from Hansard

Mike Penning (Hemel Hempstead) (Con): Will the Minister confirm that many of my constituents who formerly worked for Dexion and had their pensions stolen from them no longer need to take up benefits, because they will receive compensation from the financial assistance scheme? Will he confirm that the Treasury will not—as a result of Government delay in giving my constituents the compensation that they deserve—take up to 40 per cent. tax from my constituents who have got their pensions through FAS?

Mr. O'Brien: The hon. Gentleman will be pleased to know that, this morning, I was able to talk to his constituent, Mr. Humphries, and tell him that we hoped to make an announcement today that the Treasury had agreed that the lump sum payments to be paid to various FAS recipients can be taxed in a way that means that most of those people—it depends on their tax circumstances—will not be pushed into the higher tax bracket as a result of those lump sum payments, so they can spread their tax payment over time. I am sure that the hon. Gentleman’s constituent will welcome that, and that he will, too.

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