Has Labour really ransacked our pensions?
With the election campaign gathering pace, much of the focus in the first week has been on the economic track record and policies of each of the parties. Pension policy is an important aspect of economic policy.
Informed Choice chartered financial planner Martin Bamford has been quoted in an article on This is Money, looking at Labour’s track record when it comes to pensions since 1997.
Starting with the decision to scrap the dividend tax payment on UK equities for pension funds:
‘This raid on pensions reduced the value of retirement funds by over £100bn,’ says Martin Bamford, pensions expert at award-winning independent financial adviser, Informed Choice.
‘Effectively, Labour has stolen £5bn a year from our pension funds. And that 1997 legislation really set the tone for things to come.’
The article goes on to examine the impact of pension simplification in April 2006 (A-day) and the Pension Credit:
‘A-day was construed with the aim of making pensions simpler, but they just ended up even more complex,’ he says.
‘The Labour government thought that if they equated ‘simple and cheap’ with ‘pensions’, people would be encouraged to save for retirement. Which, of course, was absolute nonsense.
‘Theirs has been a disjointed and ill-thought out policy with no consistency’
On the subject of Pension Credits, Bamford adds: ‘If one person saves carefully into a pension fund all their life and another squanders away their money on booze and fags, they may well both end up with exactly the same income in retirement.’
You can read the article in full here.
Attempting to bring pensions to the top of the election agenda, the newly formed U Party hope to have candidates in around a dozen constituencies. Their policies include simplifying the four state pension systems into one and establishing a ‘fiscally neutral’ tax framework for pensions.