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Tories rule out Aussie pensions

Conservative Shadow pensions minister Nigel Waterson has rejected introducing Australian-style compulsory pension contributions.

At a debate on pension provision hosted by Pointon York last week, company chairman Geoffrey Pointon asked whether the Conservatives believed in soft compulsion to encourage more pension saving.

Waterson said: “We certainly do not believe in compulsion on the Australian model. First, it is not very Conservative to tell people what to do with their money and, second, we do not want to end up getting sued by people who have been told to do something that turns out not to be in their interest.”

He conceded that auto-enrolment might be the solution to increasing pension saving but said means-testing required further investigation.

He said: “In the most pessimistic scenario, we might end up with smaller pension savings overall once personal accounts have been introduced, which is an appalling prospect. We do not want to inherit a turkey.”

Waterson denied that the Tories are sitting on the fence by not declaring whether they will retain personal accounts if they are elected into Government before 2012. He insisted that the party are merely investigating whether the system will work. He said: “We have got to find out about the nitty-gritty because nothing on this scale has been tried before.”

Syndaxi managing director and Personal Finance Society chairman Robert Reid said he does not believe in soft compulsion and considers that the single level of contribution in personal accounts will render the scheme ineffective.

He said: “It will become totally inadequate the older you get. If you are going to compel people to join something, then it has at least got to be fit for purpose.”

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