Once again we have a government measure shattering confidence in the idea of saving into a pension. Pensioners and workers will rightly feel they are having the carpet swept from under them as the level of income they can expect in retirement will now fall by following a different measure of inflation.
As with all things connected to pensions – like Gordon Brown’s dividend tax raid on pensions in 1997 – the impact of this switch will only be felt by people over the longer term. Initially the impact on pension incomes from CPI indexation will be small but will gather force as the years go by. After a lengthy retirement individuals could be receiving a pension that is up to 25% lower than it would have been under the link to RPI.
We really expected better from pensions minister Steve Webb, a Lib Dem MP who has established a reputation as someone who understands the need for genuine and effective reform in this dizzyingly complex area.
No comments:
Post a Comment