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Tories could switch savings focus

The Conservatives are considering plans for a flexible lifetime savings vehicle and warn that the latest delay to auto-enrolment “casts a shadow” over personal accounts.

In an interview with Money Marketing at the Conservative conference in Manchester, Shadow pensions minister Nigel Waterson revealed the Tories are furious they were not consulted on changes to auto-enrolment timeframes. He says: ” I think that does cast a real shadow over the whole project.”

Plans for a lifetime savings account were included in the last Tory manifesto in 2005. Industry experts believe the auto-enrolment delay has focused Tory minds on radical changes to the scheme. Proposals may include the promotion of workplace Isas.

Waterson says: “We are looking at all sorts of flexibilities. I think we might get away from the notion of pensions and look at lifetime savings. We have not got a developed policy yet. All I can say is that we are certainly looking at the KiwiSaver model quite closely.”

Under New Zealand’s KiwiSaver, people can access their pension savings to buy a first home, fund healthcare if they become seriously ill, deal with financial hardship or if they are moving overseas.

Cicero Consulting director Iain Anderson says: “The Conservatives are certainly angered by the Government’s recent moves on personal accounts and are looking at plan B actively now. This includes promoting the Isa as the main vehicle for lower-income-earners as part of likely lifetime savings proposals.”

On Tuesday, Shadow Chancellor George Osborne said the Tories would “reverse the eff- ects of Gordon Brown’s pension tax raid” over the long term. This would be unlikely to mean a straight reinstatement of tax credits on pension fund dividends, according to Watson Wyatt.

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