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Government’s pension reforms are sending the wrong message, says Eagle

Shadow Treasury chief secretary Angela Eagle has attacked the Government’s pension reforms, claiming they put people off saving for retirement.

Speaking at a fringe event at the Labour party conference in Liverpool last week, Eagle said switching indexation of pension increases from RPI to CPI and the accelerated increase in the state pension age sent the wrong message.

She said: “The RPI/CPI switch takes a quarter out of what people think they will have at retirement so they are not going to get what they expected. The sudden increases in the state pension age this Government has introduced make people think they are never going to get to retirement, so why bother saving.”

At a separate fringe event, National Association of Pension Funds chief executive Joanne Segars said the increase in the state pension age is going “too far too fast” and criticised the recent Government announcement that employee contributions into public sector pensions would rise by an average of 3.2 per cent.

She said: “It is not helpful and it is leading many to leave public sector schemes.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Lest we forget – It was the Labour party that forced Stakeholder pensions through. I understand that only around 4 million stakeholder pensions have been sold since 2001 mainly inflated by block transfers such as The Building and Civil Engineering (B&CE) scheme. But, B&CE aside, stakeholder pensions have failed against their original objective of spreading pension membership among lower earners mainly because the lower earners WON’T PAY FEES!. The government removed distribution costs and forgot that this would also remove distribution. What a shame that Big Mac Hoban MP hasn’t learnt the same lesson with the idiotic removal of commission from other investment products!

  2. Was it not Ms Eagull who told the world that the ABI said 40% of life office expenses was commission paid to intermediaries? That is what sparked off the RDR? When shown a Skandia Personal Pension illustration which proved that the commission was a tiny fraction of the total expenses charged by the provider there was stony silence.

    New Labour did more for the decimation of savings that any government in living memory. Ms Eagull was at the forefront of all the advice bashers, that attitude smacks of communism.

  3. The State and Public Sector pensions are costing so much that they simply HAVE to be modified. I don’t see how anyone can reasonably argue with that. And the changes proposed are far from sudden.

    Of greater concern to me is this goverment’s failure to honour the Conservatives’ pre-election promise to undo all the damage to the pensions framework inflicted by its various predecessors over the past 25 years, of which stakeholder embodied the most offputting package of changes. There are of course also the issues of the tax on pension funds and the annuity trap.

    Unless and until these things are addressed, public confidence in saving for retirement by way of a personal pension will continue to be eroded. For some years now, it’s been a tough call to recommend a personal pension to anyone other than higher rate tax payers, unless their own contributions are augmented by contributions from their employer or from a relative. Yet basic rate tax payers comprise the great majority of people for whom saving into a personal pension should be of greatest importance. Change, change, change, but none of them the right changes. Barmy.

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