Tories promise an extra £10 on pension

The Conservative Party has pledged to provide an extra £10 for every £100 towards the pension pot of a basic rate taxpayer in an effort to combat what it calls the pension ‘time-bomb.’

The scheme will form part of a £1.7bn tax-cutting package if the Tories are elected in the forthcoming General Election and will mean that an average earner could potentially receive a £500 annual increase across their working lifetime.

The Tories say around 10 million basic and starting rate taxpayers would instantly benefit from the initiative, to come into effect from April 2006.

Conservative leader Michael Howard, says: "Encouraging people who help themselves; rewarding families who do the right thing; helping tomorrow's pensioners today - that is what a Conservative Government will do.”

The Conservatives say the latest announcement falls within their package of targeted tax cuts of £4bn, adding to plans to halve council tax for more than five million pensioners aged 65 or over in their first Budget.

Howard says: “Britain today faces a "pensions time bomb" - a time bomb that threatens people's sense of security.”

He claims close to half of the country’s workers are not saving for their retirement, under the current Government, while by 2050 there will only be half as many workers to support each pensioner than there are today.

He criticises Labour’s pension strategy, and in partcular the fact the Government has asked the Pension Commission to report its findings after the election, adding: “The Liberal Democrats simply have nothing to say at all.”

The Tories say they will announce a third tax-cutting initiative during the week.

Labour, meanwhile, has moved quickly to dismiss such a scheme, calling it a "con" that would be impossible to deliver.

Speaking yesterday, Transport Secretary Alistair Darling said the Tories simply do not have £1.7bn to spend on pensions.

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