Chancellor Gordon Brown claims that changing the pension tax rules was the right decision in terms of long-term investment in the economy.
On the campaign trail in Scotland ahead of next month’s elections, Brown said his 1997 Budget move to scrap advance corporation tax relief on pension scheme dividends was “the right decision for investment and it was the right decision for the future of our economy”.
Brown aides insist the move was a much needed simplification of the system, removing a double taxation “distortion”.
The Prime Minister also gave Brown his full backing last week, despite suggestions from Blair’s former economic adviser that he was unhappy with the move at the time.
Also campaigning in Scotland, Blair said: “It was the right decision then and it is the right decision now.”
Brown’s standing was also helped by former Conservative pensions adviser Stephen Yeo, who is currently senior partner at Watson Wyatt. Yeo told a national newspaper that although the move had not helped, it was not one of the major reasons for the decline in final-salary schemes compared with issues such as increased longevity and the stockmarket crash.