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&#39Return pension cash if fund fails to top Mig&#39

Scottish Life is calling on the Government to offer pension savers a money-back pledge if their retirement pot fails to reach the level of the minimum income guarantee.

Head of pensions strategy Steve Bee says people who find at retirement that their savings are not enough to push them over the Mig threshold should be allowed to get back their pension pot.

This would include any investment growth over the period but would be net of tax allowances and policy charges.

The Mig is currently set at £98.15 a week for single people and £149.80 a week for married couples.

ScotLife says the current system penalises savers bec-ause their savings are means-tested against the Mig and can end up being worthless as they are, in effect, being taxed at 100 per cent if they do not exceed the Government&#39s guaranteed income level.

The company believes the Government could overcome the public&#39s inertia over pension savings and bridge the £27bn savings gap by offering a money-back guarantee.

ScotLife also hits out at the Government&#39s pension credit proposals.

The credit is aimed at rewarding people for saving with an additional top-up but carries a hefty 40 per cent tax levy for those who qualify.

Bee says: “In effect, the savings of poorer people are being taxed at 100 per cent. The Government should not be in the business of penalising people who try to save and we do not want to be in the business of selling products that may be of no benefit to our customers.

“People who find at the end of their working lives that their pension savings are of little or no use to them should be given the right to undo their pension arrangements and get their money back.”

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