The Conservatives will aim to restore the health of occupational pensions, shadow work and pensions secretary Theresa May says.
In a paper - Providing for Pensions: Principles and Practice for Success, published by Politeia today - May explained the collapse of the UK pensions system was focusing attention on the totally inadequate levels of saving in Britain's ageing society.
She says the roots of the decline of the occupational pensions system stemmed back to Gordon Brown's removal of the tax payment on dividend payments, announced in the 1997 budget - but admitted this was justified by a Tory decision to restrict the accumulation of assets in pension funds in the 1980s, which she said was "regrettable".
May says a number of unhelpful regulations and accountancy rules had also taken a heavy toll on occupational pensions.
However she says the Tories would reverse this decline and help restore the health of occupational schemes.
May says the three key principles at the heart of Conservative pensions policy would be to ensure an adequate level of security for all in retirement; to restore the health of occupational pensions; and to encourage responsible saving for the future through a culture that rewards, rather than penalises, saving.
May confirmed the specific actions a Conservative government would take on pensions are:
- The 2012 reforms for auto-enrolment and personal accounts will be addressed: auto-enrolment may be brought forward from 2012 on a voluntary basis, allowing employers to plan for implementation. Concerns about the need to ensure sufficient saving in the new personal accounts by lower and middle earners will also be tackled.
- New approaches to defined benefit schemes will be explored so companies can retain such schemes, and hybrid schemes with elements of defined benefit and contribution will be explored. The regulations which make such schemes harder for companies to operate will be reviewed.
- The obligation to buy an annuity by 75 will be removed and people will be given more flexibility once retired.
- The link with earnings would be restored for the state pension, paid for by increasing the state pension age to 66 (by 2016 for men and 2020 for women) - in line with the consensus in the UK and western Europe on the need to raise the retirement age.
- The default retirement age would be reviewed to allow for greater flexibility in working beyond that age and encouraging it where it is practical to do so.
- Practical measures to encourage savings will be considered, including early access to pensions savings, as already happens in countries such as New Zealand and the US.
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