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ABI’s Haddrill says tax cuts will hurt pensions

Association of British Insurers director general Stephen Haddrill has claimed Prime Minister Gordon Brown’s plan to cut taxes will increase the pension savings gap.

Brown has said explicitly that the Treasury will announce tax cuts in Monday’s pre-Budget report.

But speaking at the Global Financial Leadership Forum in New York today, Haddrill said this would serve only to make the pension crisis worse.

He said: “Having been on a binge of debt, every spare penny is going into reducing loans not into saving for old age. The Government has no immediate answer to this. Indeed its apparent plan to reduce tax rates for those on lower incomes will reduce the tax incentives to save in a pension and may make the problem worse.”

Haddrill was adamant that UK insurers were weathering the financial storm well.

He said: “How safe are the insurance companies that stand behind UK pensions? The industry’s view is absolutely clear. It is safe and stable. It went into the crisis in good shape and remains robust.”

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