The tax reforms for pension schemes and pension savings that came into effect last April remove the complexity that had led over many years to different tax rules applying across numerous types of pension scheme. As I have said, those changes have been very successful. The long-term benefit is a streamlined regime that is easier to understand and cheaper to administer, and which was, and still is, broadly welcomed by the pensions and savings industry.

The regime was put together after close consultation with the industry over a number of years. That engagement has continued since the enactment of the FinanceAct 2004. That continuing dialogue has proved to be very useful and has led to a number of changes in this Bill to improve further the benefits of the new regime. All the technical improvements to the alignment of benefits are in response to representations from the pensions industry. The changes have been warmly welcomed. Most of them fall into one of two categories. Some are responses to either regulatory or tax changes elsewhere. The other group is wider in scope and covers a number of measures to eliminate undue restrictions on the administrative practices of schemes, and so provide greater flexibility for scheme members and administrators. Government amendments Nos. 136 and 137 belong to that second group.

In response to representations, amendment No. 137, on the rules of pension commencement lump sums, will allow lump sums to be paid up to six months before the pension commences so long as a pension scheme is arranging for a pension to commence. That will allow schemes and pension members greater flexibility in arranging a pension. It will allow savers time to take advantage of the open market option and choose the most suitable option annuity for them, and it meets principles underlying pensions tax relief. The amendment will apply retrospectively to A-day to ensure that those lump sums that have been paid remain tax-free. It has been welcomed by the pensions industry and would ensure that tax-free lump sums can continue to be paid in a flexible way. I commend it to the Committee.