Friday, 13 February 2004

Show me the money - coda

Clive Summerfield @ Friday, February 13, 2004
Well having had more time to look at the Pensions Bill, it gets worse. Firstly it halves the level of protection from 5% or the rate of inflation, which ever is lower, to 2.5% or the rate of inflation. So anyone with a private sector (not public sector note) pension had better start praying that inflation never gets out of control again.

It's not all Labour's fault. The origins of the crisis go back to legislation rushed in by the Tories in the aftermath of the Maxwell affair. They forced funds to buy annuities for existing pensioners first. As a result anyone not yet retired but who's fund was in trouble would end up with two thirds of bugger all.

However, Labour must accept responsibility for the majority of the pensions crisis. The stealth tax on dividend payments to pension funds netted £5 billion in its first year, but compounded this works out at about £100 billion. Sure there would still be problems, but nothing like the ones now faced.

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