Shadow Chancellor Oliver Letwin blames the Govern-ment’s record on means’ testing and taxation of savings for the pension crisis.
Letwin, speaking at the Aifa annual dinner in London last week, said the Tories could undo the damage by reversing policies on means’ testing. He said they would restore the incentive to save, with the lifetime savings account and by increasing the state pension which would lift about 500,000 pensioners out of means’ testing in the first four years of a Conservative Government.
He said that lower inflation and increased longevity has aggravated the problem but that pensions had been hit with three hammer blows by the Labour Government – the 5bn raid on savings, the diminution of tax advantages for savings and the vast extension of means’ testing in retirement. He added that the crisis was certainly not as a result of under-regulation of pensions.
He also hit out at the way in which welfare reform minister Frank Field was removed from his post several years ago, describing this as a national tragedy because instead of policies moving towards incentives for saving, they moved the opposite way. He said this happened because the Prime Minister was too interested in global policies, allowing the Chancellor to get rid of Field and impose his means’ testing policies.
He warned that pensioners were telling their grandchildren not to save because they had seen their savings negated by means’ testing.