Tories reveal pension overhaul plans; note 'key role' for advisers

A Conservative government will introduce a radical overhaul of the pension and savings system, Theresa May said yesterday.

Speaking at the annual Tax Incentivised Savings Association (TISA) conference, the shadow secretary for work and pensions said the Tories will bring in wide-ranging measures - including new savings and pension regulations - to repair a system damaged by 12 years of Labour government.

May also underlined the key role advisers will play in resurrecting the country's financial services industry and encouraging a culture of saving.

In a far-reaching speech, May said the Conservatives will look at viable alternatives to defined benefit pensions and bring forward auto-enrolment. She also reiterates the party's commitment to establishing a new consumer protection agency.

She said the pension system is in need of urgent repair "after taking a battering over the last 12 years".

"Deeply damaging trends must be reversed to avert a calamitous situation", she says.

According to May, the pension crisis has been caused in part by a cultural aversion to saving and advisers will play a key part in reversing this mindset.

"We need a pension system that rewards people for saving and a culture which encourages this - and good financial advice is crucial to ensure people save for the future," she says. "We have to extend, therefore, the availability of good, qualified financial advice."

The Tories will look to incorporate pensions into the more general culture of long-term saving.

If elected, the party will reverse Gordon Brown's "unforgivable tax raid", which May says was also a major factor in the current pension crisis, and will end the obligation to buy an annuity at the age of 75.

Although the defined benefit pension deficit is growing, she thinks it would be short-sighted to give up on the scheme altogether. However, the Tories will look at alternatives, including adopting "hybrid" models where the risk is shared between both employer and employee.

Personal Accounts are another key area which will fall under the Conservative microscope.

"We will review the personal accounts project as a matter of urgency," she declares.

May also called for a speedier roll-out of the scheme, arguing that paying a contribution of just 1% up to 2015 is inadequate.

"We must ensure auto-enrolment is introduced smoothly and early enrolment might allow for smoother implementation. It is disappointing the government hasn't looked at this."

Rounding off a scathing attack on Brown's government, May accuses Labour of turning a blind eye to the nation's spiralling debt and undermining the UK's sound financial reputation.

"Government under Cameron will be guided by a belief in responsible saving," she says. "And an important step is improving the availability and quality of financial advice."