The Government is unlikely to introduce compulsion on stakeholder, according to Stewart Ritchie, pen...
The Government is unlikely to introduce compulsion on stakeholder, according to Stewart Ritchie, pensions development director at Scottish Equitable.
He predicted that effective compulsion will be introduced by stealth, by putting the burden of any additional compulsion on employers, albeit with the cost of that eventually being passed on in practice to employees.
Ritchie said: "Jeff Rooker, pensions minister, has said that if stakeholders are not a success on a voluntary basis, then he would consider making them compulsory.
" I believe if it comes to that, the Government won't want to make an unpopular decision. It will be very difficult to do and it will be quite easy for the opposition to attack the decision. I expect what might happen will be similar to what Gordon Brown did in introducing a hidden tax on pension funds in 1997, by using stealth, introducing compulsion for stakeholder pensions through the back door.
"This would be done by introducing compulsory levels of employer contributions. It would follow that if employers have to make a contribution equal to, say, 5% of the employee's wage over a certain number of years, then the employees will receive 5% less in pay rises, effectively meaning they are contributing that amount themselves. This system will be firmly in place before many employees the voters catch on to what is going on."
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