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We must know if stakeholders are to benefit

I was looking for three particular pension issues in this Budget and only one of them came up.


Neither the Chancellor himself nor the Budget


documents seem to say anything about the require-


ment to buy an annuity by


the age of 75 or about triggering the expected changes to small self-administered scheme administration.


The issue which he did deal with was the minimum income guarantee.


There are two aspects to this. The first is to change the capital rules for today&#39s pensioners. Now they will be able to hold £6,000 in savings instead of £3,000 before they lose any means-tested inc-ome from the minimum income guarantee.


They will not lose the minimum income guarantee altogether until they have £12,000 of savings instead of the pre-


vious cut-off of £8,000.


The second aspect of this matter is the effect that the minimum income guarantee has on whether today&#39s workers should save for their retirement.


The Chancellor announced that the Government will examine the concept of income taper or other measures through which the minimum income guarantee can provide extra help to people who have provided for themselves.


The trouble is that this consultation exercise is


to bear fruit &#34in the next Parliament&#34, almost certainly after April 2001 when stakeholder pensions are scheduled to start.


What we need from the Government today is an unequivocal statement that people who choose to pay in to a stakeholder pension will benefit from doing so and


will not simply have their sacrifice of disposable income offset pound for pound against means-tested income support in old age.


There are other aspects of the Budget which have indirect effects on pensions.


The repayment of Government debt implies a cut in the supply of gilts, which, in turn, is likely to make annuities even more expensive. Also, anything which makes other uses for money more attractive &#45 paying in more to an Isa or investing in the family business &#45 is in competition with pension contributions.

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