UK opposition seeks urgent pension reform
UK - The UK should urgently undertake the necessary reforms to become "one nation in pensions", said the opposition's pensions spokesman.
The Conservative shadow pensions secretary David Willetts was speaking at the National Association of Pension Funds’ annual conference in Glasgow today - in place of pensions minister Andrew Smith who had pulled out.
Willetts said: "It's back to the old bad days of managers versus workers and this is not the short of society we want."
He presented a six-point plan for pensions, designed to overcome the industry's current crisis and secure a better pensions environment for the future. The plan includes reform of state benefits and the delivery of better ways of providing incentives for people to save - other than the traditional contracted out rebate.
The plan also includes finding ways to harness the ‘power of inertia’ to make it easier for employers to contribute to pension schemes and for employees to stay within workplace pension schemes. It also seeks to make it easier for companies to change the terms of their pension schemes instead of closing them
Willetts also wants to make it easier for employers to give proper pension information to their employees; he also wants to move to an inclusive approach to tax relief.
On this last point, Willetts announced a proposal to abandon the current lifetime savings cap - if all the company's employees, "from the highest paid to those on the minimum wage", are given access to the scheme on the same terms.
He said that chancellor Gordon Brown was tackling the wrong problem when he proposed limiting an individual's pension fund to 1.4 million pounds (1.95 million euros) last December.
"The challenge is not to limit the amount of money people can have in their pensions schemes but the opposite. The challenge is to encourage more people to put more money into their pensions."
He added that the chancellor's proposal presents three major problems. "First, the proposed limit is in practice lower than the current earnings cap and would affect far more than the 5,000 people claimed by the ministers." He said that, according to an independent estimate, the number of affected people could be as high as 600,000.
"Secondly the proposal only to up-rate the limit in line with prices will cause all sorts of problems and ever greater numbers of people could be caught in the trap and planning ahead will be impossible as no one can predict the future value of their fund."
Willetts mentioned the huge administrative costs of the new rules where schemes will be obliged to report every year on the fund value of each member, as another problem related to Gordon Brown's proposal.
Willetts concluded his presentation by saying that his party's view on pensions is a "positive and constructive way forward to tackle one of the biggest crises facing Britain today".