UK - Pension simplification will cost twice as much per year as retrospective compensation for workers with lost pensions.
The Inland Revenue says introducing the simplified pension regime would cost the exchequer “a few hundred million pounds” for the first three years.
Revenue spokesman Peter Hopkins – speaking at the Pensions Management Institute Spring conference – said its estimates are £15m in 2006, £50m in 2007 and £135m in 2008 – due to more people taking advantage of tax breaks.
But former government pensions adviser Ros Altmann (pictured) countered arguing that the annual cost would “quickly exceed £200m”.
The figure, she says, is approximately twice the annual cost of compensating the 60,000 workers who have lost their pensions though the collapse of their employer.
Altmann said compensation would cost “less than a hundred million pounds” a year.
She said: “How can the government justify spending hundreds of millions of pounds on giving the highest earners more tax-free cash from their £1.4m pensions, yet refuse to spend taxpayers’ money of less than £100m a year, to restore confidence in our pension system and to give these people back the pensions they saved for?”
Department for work and pensions spokesman Peter Askins said the subject remains a “highly politically-charged issue”.
He said: “We are looking into retrospection but do not want to raise hopes.”Altmann received backing from delegates who claimed politicians failed to understand “long-termism” which was essential to pension provision and argued compensation was a valid use of taxpayers’ money.
The secretary of state for work and pensions has told MPs clawback and avoidance measures could be imposed for the people responsible for driving Carillion over the cliff.
Occupational pension provision has continued to grow in value, but there remains large variance in incomes across the pensioner age group, according to latest government data.
Defined benefit (DB) schemes could have an aggregate surplus by 2021 under Pension Protection Fund (PPF) projections, its strategic plan for 2018 to 2021 reveals.
Investment consultants are failing to recommend products that outperform net of fees, the Competition and Markets Authority (CMA) has said as its investigation into the market continues.