The Lord Giveth…and taketh away …

In last weeks’ posting, I said that I doubted the Chancellor would be able to keep his dirty mitts off pensions. I am sorry to report that I was right although even I didn’t appreciate just how underhanded he was going to be. Along with his annoucement that he was extending the restriction of tax relief to those earning effectively £130,000 (we already knew about the £150,000 limit) Mr Darling announced that he intended to raise the State Pension by 2.5%.

Much rejoicing in the Labour camp that at least pensioners – some of those most affected by rising prices and reducing benefits – would be winners in the budget merry go round.

But hang on a minute…what’s this…things not apparently what they seem?? Surely a Cabinet Minister would not be being economical avec la verite? Oh yes he was…
You see, what he omitted to mention was that the State Earnings Related part of the pension WOULD INDEED be frozen, as would the old graduated pension element which is paid to over 10 million of us.

And the lie doesn’t stop there. If you are one of the lucky male pensioners who happen to have wives under 60 don’t expect any windfall increase on your current additional pension either. All of these ’savings’ amount to approximately £350million. Hardly a drop in the ocean but not exactly significant when compared to the overall deficit of several billion that this country faces.

Hitting those who have worked all their lives and paid their taxes seems to this commentator a rather petty approach to a major problem.

Meanwhile, on the Regulatory front, the Pensions Regulator has announced that Trustees should adopt a stance that considers any inducement to transfer out liabilities from the final salary pension scheme to be suspect and not in the members’ best interest. While this may indeed be true for many average earners, it may not be true for all and perhaps demonstrates the fact that the Regulator has failed to grasp that DB schemes are in their death throes (contributed to by poor regulation by tPR) and issuing pronoucements making things even more difficult for Trustees is simply not helpful to those DB schemes that are struggling to survive.