Labour announces pension pool plan

A pensioner holds some change in her hand.

A pensioner holds some change in her hand.

Rachel Reeves said Labour would introduce new laws to allow company pension schemes to operate as one large pool that all members pay into

First published in National News © by

Shared pension pots that can boost the value of savings by up to 30% would be introduced under a Labour government, the party has announced.

New laws would allow company schemes to operate as one large pool that all members pay into instead of individual funds, Rachel Reeves said.

The s hadow work and pensions secretary claimed the reforms, influenced by schemes in the Netherlands, Denmark and Canada, would allow members to benefit from investment growth even after they have retired.

Instead of pensioners converting their ring-fenced savings into income they would be paid out from the joint kitty.

In a speech to the Resolution Foundation, Ms Reeves said Labour was launching an independent taskforce, chaired by Pensions Institute director Professor David Blake, to look at how to increase retirement income.

She said: "Labour supports people who do the right thing, work hard and save for a pension. But too many people who have saved throughout their lives risk seeing their retirement savings lost through mis-selling and poor value schemes.

"I welcomed the changes in the Budget to allow savers more choice when it comes to retirement. We want people to have the freedom to choose a retirement product that works for them. But we want them to have good products to choose from.

"Experts are already warning that this market will be hit by 'marketing wheezes' and 'expensive and inappropriate products' that won't help savers. We have to make sure that those coming up to retirement know that they won't see the money they've worked so hard to save disappear into poor-value schemes.

"We also need to do much more to boost the value of those savings. In the Netherlands and Canada, new forms of collective pensions have increased the value of pension pots by up to 30%.

"So I'm announcing today that a Labour government would legislate to enable these schemes in the UK, and I will ask the taskforce to look at how these schemes could best be introduced."

Labour is also examining plans to include more than 1.5 million extra people in automatic workplace pension schemes.

The proposal to include lower earners in the Government's pensions auto-enrolment scheme would include more than one million lower earning women who Labour say have been excluded from the project.

Ms Reeves said the rise in zero-hours contracts, part-time and low-paid jobs means more people risk missing out on the chance to save for retirement.

Labour estimates the proposal to lower the threshold for auto-enrolment from the current level of £10,000 to the National Insurance lower earnings limit of £5,772 will cost £20 million by 2018/19 due to extra pensions tax relief.

The party is examining plans to pay for the proposed scheme by reducing the cost of appeals against fitness-to-work assessments, which cost the Department for Work and Pensions (DWP) £30 million last year.

Ms Reeves added: "Retirement should be something to look forward to, but for far too many people the insecurity they face during their working life is set to continue when they retire.

"With the rise in zero-hours contracts, part-time and low-paid jobs and insecure work, an increasing number of people risk missing out on the chance to save for their retirement."

Work and Pensions Secretary Iain Duncan Smith claimed the "unfunded promise" would put families' financial security at risk

Neil Carberry, CBI director for employment and skills, said it was " not clear that automatically enrolling this group of low earners is necessarily in their long-term interests".

Pensions Minister Steve Webb described Labour's plans as "an absurdity" that would see those on low wages take home less money than before.

TUC General Secretary Frances O'Grady said it was "absolutely right to extend pensions auto enrolment to the low paid who are missing out".

Send us your news, pictures and videos

Most read stories

Local Info

Enter your postcode, town or place name

About cookies

We want you to enjoy your visit to our website. That's why we use cookies to enhance your experience. By staying on our website you agree to our use of cookies. Find out more about the cookies we use.

I agree