18 March 2010
Works and pensions spokeswoman Theresa May said the
Conservatives will aim to restore the health of occupational
pensions.
In a paper - "Providing for Pensions: Principles and Practice
for Success", published by Politeia today - Ms May explained the
collapse of the UK pensions system was focusing attention on the
totally inadequate levels of saving in Britain's ageing
society.
She said the roots of the decline of the occupational pensions
system stemmed back to the removal of the tax credit on dividend
payments, announced in the 1997 budget - but admitted this was
justified by a Tory decision to restrict the accumulation of assets
in pension funds in the 1980s, which she said was
"regrettable".
However she said the Tories would reverse this decline and help
restore the health of occupational schemes.
Ms May said the three key principles at the heart of the
Conservatives pensions policy would be to ensure an adequate level
of security for all in retirement; to restore the health of
occupational pensions: and to encourage responsible saving for the
future through a culture that rewards, rather than penalises,
saving.
Ms May confirmed the specific actions the Conservative
government would take on pensions are:
- The 2012 reforms for auto-enrolment and the National
Employment Savings Trust (NEST) will be addressed; auto-enrolment
may be brought forward from 2012 on a voluntary basis, allowing
employers to plan for implementation. Concerns about the need to
ensure sufficient saving in the new NEST by lower and middle
earners will also be tackled.
- New approaches to defined benefit schemes will be explored so
companies can retain such schemes, and hybrid schemes with elements
of defined benefits and defined contribution benefits will be
explored. The regulations which make such schemes harder for
companies to operate will be reviewed.
- The obligation to buy an annuity by 75 will be removed and
people will be given more flexibility once retired.
- The link with earnings would be restored for the state
pension, paid for by increasing the state pension age to 66 (by
2016 for men and 2020 for women) - in line with the consensus in
the UK and Western Europe on the need to raise the retirement
age.
- The current default retirement age of 65 would be reviewed to
allow for greater flexibility in working beyond that age and
encouraging it where it is practical to do so.
- Practical measures to encourage savings will be considered,
including early access to pensions savings, as already happens in
countries as New Zealand and the US.
