So, the pension debate rumbles on over how to reach out to the great
unpensioned. Most of those in the know advocate some form of compulsory
contribution as the only way to achieve this goal.
Meanwhile, the Government's answer- stakeholder – appears to be foundering
before our very eyes, with at least two companies, Clerical Medical,
although temporarily, and Scottish Amicable already effectively giving up
the ghost two months before the compulsion deadline for firms with five or
To the Government, compulsion represents one of its biggest dilemmas. Just
how do you get re-elected in five years after imposing a new tax on the
majority of your voters? Because that is exactly what compulsory
contributions would be – a tax on the poor, those without access to a good
occupational scheme. However, there could be an answer and it comes from an
unlikely source – AITC director general Daniel Godfrey.
He is proposing that the Government raises money today by increasing the
national debt. The capital raised could then be used to fund a stakeholder
for every one of today's workers while we continue to fund today's
pensioners through current taxation.
The benefits of the scheme would be an eventual reduction in the burden on
the state, which could be used to repay the debt, while the debt itself
could provide the answer to the shortage of long-dated gilts, solving the
annuity funding crisis.
What better way for the Government to ensure stakeholder is a success by
giving everyone a free plan? It all sounds far too simple and easy to be