The Trade Union Congress has strongly come out against proposed increased tax incentives being offered to companies and individuals. The union believes that such steps would only broaden the divide between the rich and the poor.
As of now, almost half of the money apportioned by the government towards pension tax relief goes to tax payers who pay higher rates. Also, a basic-rate tax payer should save 78 pence to make a pension contribution for one pound as against 60 pence being paid by the higher-tax payer. The pensioners in the high tax bracket number only 2.5 million as against the total retired workforce of 13 million.
"New pensions incentives will be expensive, won't work and will increase inequality,” says TUC general secretary, Brendan Barber.
Its new report, ‘Expensive, ineffective and unequal’, the organisation says a better idea would be to make it mandatory for all employees to pay into their pension.
According to the TUC pension report, more incentives will have lesser impact among those currently un-pensioned, such as the low-paid and also they will fail to significantly affect the overall savings level.
In fact, the Sandler Review states: "There is little evidence to suggest that tax incentives have a significant impact on overall savings levels, especially among lower-income groups."
Organisations including National Association of Pension Funds and Association of British Insurers (ABI) have suggested to the Pensions Commission that reforms are needed in the state pension system along with the method of imposing the tax incentives.
Pensions Committee final report is due to be published on November 30.
Posted
on : Sun, 09 Oct 2005 01:25 GMT | Pensions News
By : Paula Jenkins
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