Outrage At Pension Schemes

Today Deborah Dunleavy Conservative Parliamentary Candidate for Bolton North East expressed outrage both in a political capacity and that of a Director of a Company that advises on Pension Schemes.

Sterling Financial Advice Ltd the company that Deborah is a Director shareholder of, advises many companies and individuals on their pension schemes.

Deborah thinks Gordon Brown has betrayed British Pensioners, and she says this is the general consensus of leading figures in the Financial Services Industry.

She went on to say ‘He has robbed them of security in retirement through his £100 billion stealth tax raid on their pension funds.  He ignored civil servants' advice and has destroyed what was one of world's best pension systems.  Today, people want an apology, not a cover-up. And they're wondering, 'How can we trust Mr Brown to be Prime Minister?'

In 1997, Gordon Brown imposed the ultimate stealth tax on pension funds by abolishing tax credits on dividends, costing occupational pension schemes billions of pounds and undermining the retirement dreams of thousands of people. The raid has cost pension funds an estimated £5 billion a year.

Over the long term, actuaries have predicted that Brown's abolition of tax relief will reduce the value of pension funds by at least £100 billion.

Deborah said she thought Frank Field, Labours former Welfare Reform Minister summarised things perfectly when he said 'When Labour came to power we had one of the strongest pension provisions in Europe and now probably we have some of the weakest'

Brown was warned of the consequences of his tax raid.   Secret policy papers revealed. Previously secret policy papers, finally released to The Times under the Freedom of Information Act after a two-year battle, have revealed that Gordon Brown knew along about the damage that the 1997 tax changes could cause to pension schemes.  

Treasury officials advised the Chancellor that:

The tax change would cause a massive shortfall in pension funds. The Treasury officials said that the tax would 'cause a shortfall in existing assets of up to £75 billion' and that 'employers would have to contribute about an extra £10 billion a year for the next 10 to 15 years to get pension scheme funding back on track'. The advisers concluded: 'We agree that abolishing pension tax credits would make a big hole in pension scheme finances….the loss of tax credits would cost pension providers about £4 billion a year, growing over time with future dividends' (HMT/Inland Revenue Policy Papers, 15 May-27 May 1997). 

Poorer pensioners would be hit hardest. 'The change would therefore lead to a reduction in pension benefits to the lower paid…Quite clearly any loss of pension could be difficult for someone with a small income to cope with'

Bad news for those about to retire.

The officials added that: 'Everyone in a money purchase scheme is a potential loser' and 'those who are about to retire (or who have just retired) would be worst affected' The officials said that, at the time, there were eight million people in money purchase schemes.

Deborah finished with saying that one of the things she thought would deeply shock the public was the fact that they were warned that local government schemes would require extra contributions.

The result has been that more than a quarter of council tax bills now go towards pension payments