Wednesday, 7 November 2007

Ros Altmann lines up with the Tories

Disappointing to see Ros Altmann, who has done a lot to push the the Government to improve the Financial Assistance Scheme, line herself up in the FT letters page today with the Tories and the insurers in the current spat over Personal Accounts.

Whatever issues might need to be dealt with in respect of the Government's pensions reform plans - and there are still some thorny ones - I find it incredible that she can think that a breakdown in consensus is a good thing. This is especially the case given that the Tories are clearly playing politics here, not saying anything new.

Anyway the letter below is from today's FT. The TUC and others also have a letter in there arguing that maintaining the consensus is vital. It's a shame that Ros Altmann is cheering on the destruction of a consensus that unions have worked hard to help establish and keep in place, and needlessly scaremongering about the prospects for those who save into Personal Accounts.

Personal accounts risk bringing misery to millions
Published: November 7 2007 02:00 | Last updated: November 7 2007 02:00

From Dr Ros Altmann.

Sir, At last the political consensus around personal accounts is breaking down (“Tory pensions challenge dismays industry”, November 6). This proposal is a disaster waiting to happen. It must be re-thought.

Previous policies to encourage financially unaware workers to contribute to employer pension schemes have just ruined thousands of lives, when employees trusted official assurances that they were paying into safe pension plans, but then discovered their life savings were worthless.

Rather than rescuing them and admitting their interests had been sacrificed for the greater good of others in company pensions, they were just abandoned. The government knew the inadequate regime could result in workers losing out dreadfully, but decided not to warn them and made no plans to compensate. The same is currently happening with personal accounts.

Even on the government’s own figures, some 600,000 people in future could find their personal account gives them no pension – and these will be the lower earners who can least afford to save. Their pensions will merely replace state benefits. Colleagues who did not contribute to a pension will be better off.

The issue of suitability cannot be brushed aside. The government must be honest with the public and make plans now to look after those who may lose out. Ministers know that personal accounts, as currently conceived, may not be suitable for the millions of low-paid workers potentially being automatically enrolled into them.

Either they must be allowed to have their money back on retirement, or the pension from personal accounts must be disregarded from means-test calculations.

Ploughing ahead with the current plans is irresponsible and risks bringing misery to those who find they were duped into a scheme that delivers little or no value in future.

Ros Altmann,
London School of Economics,
c/o London N3 3EE

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