GORDON BROWN moved last night to end the bitter high-level government row over pension reform by announcing that he accepted the principles of the Turner commission proposals, reports The Guardian .
According to the paper, the chancellor's conversion includes restricting means-testing for benefits, which has been one of his most cherished policies, including phasing out the pension credit - his chosen vehicle for helping Britain's poorest pensioners.
Brown startled and delighted his cabinet colleagues when he said he accepted 95% of the Turner commission proposals and would work to build a cross-party consensus.
After months of reported conflict between the Prime Minister, Tony Blair and Brown over pension reform, including claims that Blair would overrule the chancellor, Brown yesterday narrowed down his opposition to Turner to the issue of the affordability of the proposals.
The paper quotes him as saying: "What we're agreed on is that there is no issue of principle about the pension being linked to earnings. The question is this one, that Lord Turner himself has acknowledged today: an £8bn cost. I want less means-testing - I've always wanted less."
Cabinet sources said talks on the cost had been hampered by doubts over whether Mr Brown accepted the Turner proposals in principle. The government is due to publish a white paper in six weeks, with possible legislation in the autumn.
Brown made his move after Lord Turner produced his final report from the pension commission. There had been claims Brown was doggedly defending a Treasury commitment to an unsustainable current pension structure without coming up with an alternative.
Brown is quoted as saying: "I think we're actually 90% to 95% there on Lord Turner, but the issue which is still to be resolved on affordability is one on which Tony Blair and I are absolutely at one, and we know the country looks to us to manage the public finances in a prudent way."
MORE DEALS ARE LIKELY in the closed life insurance fund market, with Resolution, the largest player in the sector, ready to drive the process, reports The Daily Telegraph.
Resolution, which doubled its size last year when it snapped up the distressed insurance company Britannic, signalled yesterday it would buy other substantial books of business which are closed to new customers.
Businesses which are thought to be up for sale include the closed Abbey Life business, owned by Lloyds TSB, and Abbey National's closed funds, now owned by the Spanish bank Santander. Parts of Equitable Life may also be of interest, but not its annuity business as Resolution has made it clear it does not want to hold assets in the annuity sector.
Resolution's chief executive, Paul Thompson, told the paper: "We're of a size and scale which means there is no need for us to chase every small piece of business in the market," but there would be opportunities to make further acquisitions.
Several specialist companies that focus on buying closed life businesses have emerged in recent years. They believe because they can buy different businesses and join them together they can run them more profitably than general insurers can.
Resolution yesterday reported annual results for 2005. Operating profit, based on European embedded value, which puts a present value on long-term business, was £85.8m in the second half of 2005. There was no direct comparison with the previous year. The company will pay a final dividend of 13.21p on June 2. Resolution's shares fell 29p to 654.5p.
LAWYERS HAVE STOPPED writing wills and leading insurers have frozen sales of many life policies as a powerful alliance of professional bodies fights to overturn Gordon Brown’s Budget proposals to alter the tax treatment of some trusts, reports The Financial Times.
Professional bodies claim the proposed changes affect will affect millions of wills and insurance policies, as Brown’s surprise decision to levy tax on commonly-used trusts has prompted emergency meetings between professional bodies and the government in a last-ditch attempt to prevent the rules being introduced in this Friday’s Finance Bill.
Prudential is one of a number of insurers to have stopped writing new trust business, while Standard Life and Scottish Widows have both said they were considering their position amid fears that thousands of their customers could fall foul of the new tax rules.
The Society of Trusts and Estate Practitioners has urged its professional members to stop writing wills in the light of the tax changes and has told them to contact more than one million people to review their existing wills.
Experts have described the chancellor’s proposals as the most sweeping changes to trust law in a generation. Kevin Martin, president of the Law Society, urged the government to rethink the “rushed” measures and engage in proper consultation.
The Law Society, Society of Trust and Estate Practitioners, Chartered Institute of Taxation, Institute of Chartered Accountants in England and Wales, Association of Chartered Certified Accountants and the Association of Private Client Investment Managers have joined forces to urge that the budget changes be postponed until there has been wider consultation.
The moves follow Brown’s revelation in the Budget that from 2008 many trusts will be hit with a 6% charge every 10 years. The clampdown is aimed at “accumulation and maintenance” trusts, often used for school fees planning, as well as “interest in possession” trusts, which are used to pass wealth between generations.
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