| Tories address pension crisis with 'orphan assets' & £1.7bn subsidy |
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The Tories revealed plans today during their election campaign in Edinburgh, which involved the utilization of unclaimed and non-operational bank accounts to assist in the restoration of those company pension schemes that were lying in the doldrums. These defunct and obsolete accounts were termed as ‘orphan assets’ by the Tories.
Divulging the strategy, shadow work and pensions minister David Willetts said that he believed this plan could aid and encourage those conscientious savers who had intelligently saved for their retirement and had instead suffered an unfortunate setback with their companies going bust.
Regarding news of disapproval by some Tory MPs over the new pension plan and the course of the campaign, Willetts dismissed all such notions and said that he didn’t believe any of the stories floating around. He said, “It doesn’t fit with any of my experience. What we have is a manifesto with five clear priorities, and control of immigration is one of these priorities.”
He added that other issues would be emphasised upon as well in the campaign, as Michael Howard was going to be talking about the problems of binge drinking, crime and anti-social behaviour. The idea of using these “orphan assets” for rebuilding pension schemes constituted an element in the five-point plan of the Tories in their attempts to solve the pension ‘crisis’.
According to Willets, “The orphan assets move would help rebuild confidence in pensions by helping those who did the right thing by saving, only to lose those savings when their employer went to the wall.”
Although the conservative party plans have included a tax subsidy of £1.7bn every year to basic rate taxpayers in its bid to motivate more savings, pensions analysts believe that the conservative government’s plan of boosting tax relief on pension savings could hardly be of any help to low and middle income-earners as regards an incentive to save.
Alison O'Connell of the Pensions Policy Institute also believed that the proposed plan of greater tax relief did not have ample proof that it would promote further savings. She said “Given that we have a so-called pension crisis when more than £19bn is already being spent in tax reliefs, it is not obvious that adding another £1.7bn is really going to work.”
Likewise, while the National Association of Pension Funds agreed that all inducements for savings were appreciated, it also believed that what was actually needed was “a pretty fundamental reform of the state pension system so that it pays to save and takes more people off means-tested benefits.” Labour, meanwhile, termed the conservative plan as ‘unworkable’ and stated that the Tories' financial plans were ‘unaffordable’.
Posted
on : Tue, 19 Apr 2005 00:00 GMT | Pensions News
By : Chris Rowe
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