The LibDems claim that means-testing could undermine pension personal accounts but say they are unlikely to align with the Tories on the issue.
Speaking to Money Marketing at the LibDem conference in Brighton last week, Shadow Work and Pensions Secretary Danny Alexander said he feels as strongly as his predecessor David Laws that means-testing is the biggest danger to the proposed pension reforms.
He said there are two main dangers – the risk of mass misselling if many of the target market are pushed into a scheme that in effect just saves the Government money on benefits and the danger of a mass opt-out of individuals crippling the scheme.
But Alexander said he would find it hard to align the party with the Tories, who have also warned that means-testing could destroy personal accounts, as the parties are coming at the issue from different directions.
He said: “We have a very clear alternative policy in the citizens’ pension but the Tories, as with most things, have not. I still hope a consensus can be built and that the Tories are part of that too but we do not stand together on the issue.”
Alexander said he will be in discussions with the Government over a possible middle way of addressing the means-testing issue without moving wholeheartedly to a citizen’s pension.
He said a LibDem Government would link the basic state pension with earnings straight away, rather than wait until 2012 or 2015, and look to introduce the citizens’ pension over the next two Parliaments.