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Tories pressing for pension projection scrutiny

The Conservatives are to submit formal requests for the scrutiny of Government projections of means-testing levels and personal pension account persistency.

Tory Shadow pensions minister Nigel Waterson says he has serious concerns about the basis of Government figures after studies by the Pensions Policy Institute and Axa suggested that means-testing and opt-out rates would be significantly higher than projections from the Department for Work and Pensions.

Waterson says he is concerned that people in need of advice will not get it. He says the Tories are wary of generic advice, citing the Parliamentary Ombudsman’s recent findings as an example of Government information failure.

He says the Tories will suggest increasing scheme flexibility, such as a 401(k)-style drawdown facility, and a joined-up approach with Isas.

Waterson says Chancellor Gordon Brown’s “control freak” instincts will ensure he backs a Government-sponsored scheme while the Tories would look for maximum industry involvement.

Consensus can only be achieved with a review of public sector pensions, says Waterson, and anything else would be “like Hamlet without the Prince”. He says one of the first moves of a Tory administration would be to address this issue.

He also suggests Brown’s position would be fragile if it is found the Treasury was advised about the potential negative effect of the removal of advance corporation tax relief on pension dividends.

Waterson says: “We will be pressing the Government for the basis for their means-testing and persistency calculations. We do not want to go to all the trouble and expense of changing the pension landscape only to find we are no better off because of low persistency, levelling down and high levels of means-testing.

Tories’ key pension points

  • Scrutiny needed of means-testing and opt-out projections
  • Unease over lack of full advice
  • Will propose ideas for 401(k) style drawdown in the scheme
  • Will look at how Isa regime can complement personal accounts
  • Will look at whether product regulation is preferable
  • Public sector deal must be revisited
  • Cut down the costs and bureaucracy of running a final-salary scheme
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