Pensions - the government proposes more damaging changes

Filed Under Finance

Sometimes I wonder what the UK Government have against pensions. It is not very long since Gordon Brown raided the pensions piggy bank in a move that is estimated to cost UK pensioners £100 billion.

Now it seems the Government is interfering with pensions again. They are considering reducing the amount that an employer has to pay into a pension scheme when an employee leaves their job.

Currently an employer has to increase the amount it pays into its pension fund for early leavers in line with the retail price index. This ensures that the pension is protected, to some degree, from inflation.

The new proposals mean that employers would only have to pay a maximum contribution of up to 2.5% a year, but as the current retail price index is 3.9%, this means that over time someone who changes their job will see decrease in their pension against inflation.

This sounds like good news to employers who need pay less into their pension schemes for people who have left employment with them. However it reinforces the belief that the Government isn’t interested in supporting company pension schemes. As usual it also seems badly thought through as people made redundant or taking career breaks - maternity leave, for example - would also be affected.

It strikes me that you have to take ownership of your own pension provision, through long term savings and investments as well as with conventional pension plans. This news only re-inforces my belief in this stance.

However if you object to these proposals by the Government then you can particpate in the “e-petition” on the 10 Downing Street web site here.