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DB schemes get Tory vote of confidence

The Tories insist they are not giving up on defined-benefit pension schemes despite the closure of many final-salary schemes.

Shadow pensions minister Nigel Waterson told delegates at the Money Marketing retirement planning summit in Monte Carlo last week that the Tories are keen to do as much as possible to help employers keep DB schemes open.

He said: “DB is still the best hope of providing a comfortable retirement. There are a minimum of employers who, possibly for paternalistic reasons, will always want to offer DB. I think they should be encouraged.

“That means greater flexibility, conditional indexation, statutory override, deregulation and the like. In short, anything that will make it more attractive for employers to stay in the DB business. Otherwise, the risk of levelling down is a very real one.”

Waterson also raised long-held Conservative concerns about forced annuitisation, arguing that savers should have full control over their money.

He said as long as a minimum level of income is maintained to avoid a reliance on state benefits, there should be no compulsory annuitisation.

“The Government has a blind spot on the issue. They do not like the idea of people having flexibility over how they dispose of their pension pots. Ministers got into such a mess over alternatively secured pensions that they do not want to revisit this issue at all. Well, if we get the chance, we will,” said Waterson.

Hargreaves Lansdown head of pensions research Tom McPhail said: “I am comfortable with the idea, as long as a minimum level of income is secured. It might be an idea to cap the level of withdrawals and I also think that any sur- plus should be allowed to pass on to beneficiaries, subject to inheritance tax.”

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