Conservatives plan pensions reform
Theres May said a Tory government would encourage a saving society
Thursday, 19, Nov 2009 01:22
A Conservative government would introduce a "radical" programme of reform of the pensions and savings system, Theresa May said yesterday.
Speaking at the annual Tax Incentivised Savings Association conference, the shadow secretary of state for work and pensions said the Tories would bring in wide-ranging measures - including new savings and pension regulations.
Ms May said the Conservatives would look at alternatives to defined benefit pensions - pensions that provide a guaranteed sum, usually calculated on an employee's final salary, on retirement - and bring forward auto-enrolment to the government's new National Pensions Saving Scheme (NPSS).
Under the latter people would be automatically enrolled, through the pay as you earn tax system, in a national pensions system and would have to exercise an opt-out to not take part in the scheme.
Ms May also confirmed the Conservative party's commitment to establishing a new consumer protection agency.
The Tories would look to incorporate pensions into the more general culture of long-term saving, she added.
Ms May promised the Conservatives would end the obligation on pensioners to buy their annuity at the age of 75 and said it would be short-sighted to give up on defined benefit pensions altogether.
But the Tories would also look at alternatives, including adopting "hybrid" models whereby the risk in defined benefit pensions was shared between both employer and employee.
Ms May said the pension system was in need of urgent repair, claiming it had taken "a battering over the last 12 years".
"Deeply damaging trends must be reversed to avert a calamitous situation", she said, before adding: "We need a pension system that rewards people for saving and a culture which encourages this."
Meanwhile, Ms May said the introduction of the NPSS needed to be sped up.
"We must ensure auto-enrolment is introduced smoothly and early enrolment might allow for smoother implementation. It is disappointing the government hasn't looked at this," she said.