Shadow Work and Pensions Secretary David Willetts has said that he doesn’t ‘mind fat cats as long as there are fat kittens as well.’
Referring to pensions provisions for all, Willetts said there should be no upper limit on pension tax relief provided that all employees of a company pension scheme could join on similar terms.
According to Willetts, the electorate should be wary of Labour’s ‘secret plans’ for pensions saying plans to switch from a traditional state pension to a ‘citizen’s pension’ would see millions losing all or part of their old age pension.
“We have already warned that Labour planned to move to a citizen’s pension. This would be just another benefit, not something people had earned by the contributions they’d made. It would be very expensive – provided everyone got it.
“Mr Blair says it would cost ‘billions of pounds’. The experts agree that Labour would need higher taxes to pay for the spending plans they already have. So they can’t afford to be making more spending commitments. But there is a way they could make it cheaper. They could means-test it.”
And he warned: “Once the link with contributions has gone, no one will have a pension as of right.”
The Conservatives plan to cut back on pensions red-tape, reward saving and abolish the requirement to buy an annuity at the age of 75.
The Labour party, however, say that Conservative plans for a tax subsidy of £1.7bn each year to basic rate taxpayers to encourage them to save more for their pensions is ‘unworkable’.
Reported on the BBC news website, Willetts explained that part of the solution to the pensions’ shortfall, to which there is no ‘magic bullet’ is to encourage people to work for as long as they are able to do so.
From 2006, firms will be barred from imposing arbitrary retirement below age 65. Willetts said he was ‘minded’ to extend anti-age discrimination laws further, looking at making retirement compulsory at 70.
In December, the Labour government announced that age discrimination would be banned for anyone under the age of 65 – but rejected plans to go further after representations from business.
Workers over 65 would be permitted to request staying on beyond this compulsory retirement age, although employers would have the right to refuse.
Both parties have ruled out compulsion as a way of plugging the pensions’ shortfall.
Related items
