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Godfrey demands &#39free&#39 stakeholders

AITC director general Daniel Godfrey is calling on the Government to

introduce “free” stakeholder pensions in a move which he claims would solve

the UK pension funding crisis by 2050.

In an article for Money Marketing this week, Godfrey warns that continuing

the status quo – where today&#39s workers fund today&#39s pensioners – will lead

to either “massive tax increases or massive poverty”.

He says the Government must borrow money now to make modest contributions

to every worker&#39s choice of stakeholder, ensuring everyone has enough to

keep them off income support by age 65. As the number of fully-funded

people reach 65, Government spending requirements would fall – a saving

which it could use to pay off its debt. Once the debt was repaid, it could

lower taxes.

Godfrey says although compulsion is also a solution, he believes the

Government realises it would be political suicide to implement.

He says: “This solution spreads the costs of the transformation to

universal funded pensions across the generations that will benefit from the

change. It would take guts for any Government to take on such a large

borrowing requirement when the benefits will not be fully realised for 40

years. But investing in the future now and allowing the benefits of equity

investment to work their magic over longer periods of time could get us and

our children out of quite a hole.”

Leader, p25, Inside Edge, p26

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