Personal Accounts a ‘scandal waiting to happen’ - Matthews

It's not means testing we need..it's idiot testing!

How right Trevor Matthews is! When will any UK government realise that the best way to reduce the future burden of our increasingly ageing population is to make the retired population as wealthy as possible? They're so transfixed by the sin of giving away too much tax relief to those horrible people who work hard and earn a decent living that, once again, the baby goes out with the bathwater!

Posted by: Paul Harris

It takes an Aussie

Good for Trev. Most of the time he speaks good sense (I'll forgive the Level 6 rant!). I wonder how long before other CEOs say the same. The chances of the Government listening are probably nil. The Tories will probably solve the situation by cutting all benefits anyway. But it still doesn't address the other main problem - people (both employers and employees) will regard it as just another tax and wonder where the hell their ever increasing NI contributions are going. Consequently there will be plenty who will choose to opt out. Under current proposals this will be hugely expensive for the providers as they have to be in before they can get out and claim the return of premiums.

Posted by: Harry Katz

Means tested benefit interaction

The interaction of means tested benefits and pension 'income' (and, indeed, other cash generating products for the retired like equity release) is not simple. The issue is we don't know what means tested benefits are going to be like next year, let alone in the 20 years or so it will take for the early 'beneficiaries' of personal accounts to retire with pots exceeding the de minimus figure. As usual the law of unintended consequences is alive and well!

Posted by: Chris Robinson

Benefits!!!

The problem is like everything else in this country half the nation is propped up by benefits. If it is not working families tax credits it is Employment Support Benefit or pensoin credit etc etc. Unlike the US where people need to work to earn a living and furthermore pay into a pension scheme of some sort, here we expect the state to do it all. We have become a nation of people who need to be mothered by the state and it has got worse under Labour. Rant over!!!!

Posted by: Bob Donaldson

Personal Accounts : scandal waiting to happen

Mr matthews is right. But this has always been the case - those who make sacrifices to fund for the future lose out on any help from the State when they reach retirement. If the government is encouraging you to do something then doing it will almost certainly prove NOT to be in your best interest. Tax relief on pensions is illusory anyway - especially for basic rate tax payers. You pay tax on the annuity that is generated ! The most honest and fair way forward is to give 20% tax break on contributions to everybody (regardless of the individual's marginal rate) with a promise NOT to tax the annuity (or drawdown) in payment. Of course, the big winners are people in Public Sector jobs who receive pensions which, if they had to pay the real price, would have deductions of 25% of salary whilst they are working. In essence Public Sector workers receive back in pension benefits virtually ALL the tax they ever pay in their working lives. How fair is that ?!

Posted by: Bill Wells

Personal Accounts : scandal waiting to happen

The real scandal is that Public Sector workers pay no tax during their working lives - let me explain. Take, say, a teacher earning £40,000pa This year they will have £2,400 deducted as a pension contribution (6%) This will earn them 1/80th pension (index-linked) when they retire - so, £500pa from age 60 for the rest of their lives. They will also receive a tax free lump sum of £1,500 (3x pension) So, for a net contribution of £900 the teacher will receive £500 for (on average)22 years. A gain of £10,000 - as much as was deducted in income tax and NI contributions during the year when the benefit was earned. Oh, this doesn't take account of the fact that the teacher may have had several promotions between now and eventually retiring so that, in real terms, the tax free lump sum and the pension could be much higher. People who are not fortunate enough to have a government paid job are having to fund this situation. Now that is a scandal !!!!!

Posted by: Bill Wells

Disconcerted Effort

Its good to see that at long last Steve Bee's message is getting through to the rest of the industry. Trevor Matthews, and other Top Brass, should have been shouting this from the tree tops for the last two years in concert with Steve Bee. Don't expect a Tory administration to be any brighter than the current incumbents, so keep preaching to the stupid.

Posted by: Glen McKeown