Tories plan pensions shake-up

The Tories have published an eight-point plan to tackle the pensions crisis and "restore our saving culture".

Shadow pensions secretary David Willetts published his blueprint just hours before the Government's long-awaited Turner Report on pensions is due to be released.

Mr Willetts said: "The Turner Commission will show just how bad the pension crisis has become.

If nothing is done to put this right, retirement will fall a long way short of our expectations.

"What we need now is action. We must reverse the spread of means-testing, strengthen company pensions and provide better incentives for saving.

"Today I am setting out eight steps which a Conservative Government would take to tackle the pensions crisis. Together, these measures would restore our saving culture."

The key Tory points are:

  • Restoring the link between pensions and earnings, rather than inflation, to take more pensioners out of means-tested benefits. Over four years, that would give single pensioners an extra £7-a-week and couples £11.

  • Scrapping the obligation to use pension savings to purchase an annuity at aged 75, instead requiring people to ensure they had enough income to avoid relying on means-tested benefits.

  • Introducing a Lifetime Savings Account, with Government contributions remaining intact to help fund retirement while personal savings could be withdrawn provided they were replaced.

  • Longevity Bonds could be issued by the Government to help pension providers insure against the risk of providing a pensioner with an annual income for life.

  • Allowing companies to promote their pension schemes to employees even though they are not registered to provide financial advice.

  • No limit on senior executives' pension funds, provided all employees could join the company scheme on similar terms.

  • Encourage companies to assume all employees would join the firm's fund unless they actively opt out.

  • Using unclaimed assets in dormant bank and building society accounts to rebuild pension funds for victims of company schemes that are wound up when firms go bust.

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