Pensions become an election issue
Parties squabble over approach to pensions in battle for middle England.
Work and pensions secretary Alan Johnston has contradicted an assurance from Tony Blair ruling out the inclusion of compulsory pension contribution schemes in a major review after the general election.
Link: Cloud on the pensions horizon
Johnston said Blair had expressed a personal view and that he was ‘not ruling it out as party policy’.
During an earlier radio phone-in which raised the topic of compulsory contributions, Blair said: ‘I don’t think that is the answer’.
Shadow work and pensions secretary David Willetts said this was further proof that Blair ‘cannot be trusted with pensions’.
All this comes on a day in which Tory Leader Michael Howard announced £1.7bn of his party’s proposed £4bn in tax cuts would be used to encourage saving for pensions by adding £10 in value to every £100 put into a pension fund by lower and middle income earners.
In doing so he effectively ruled out promising a major vote-winning tax cut in order to allay middle England’s fears of a pensions crisis – partly caused, say the Conservatives, by chancellor Gordon Brown’s £5bn increase in taxation on pension funds.
Howard admitted, however, that his plans would only add £3bn a year to pensions saving and would go only a small way towards raising the £27bn more in savings required each year to fully fund vital pensions and defuse the pensions ‘timebomb’.