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Monday, 16 December, 2002, 08:24 GMT
Will Labour fudge the pensions issue?
Children
Long-term solutions needed for younger generations
Nick Assinder


The government will present its pensions Green Paper on Tuesday - and while there is growing expectation on the government, it is unlikely to present much-needed radical solutions.

It is an issue that has dogged every government for the past couple of decades.

It has seen any number of reforms and it has, in some instances, been the victim of political ideology.

Successive governments have insisted it is at the top of their agendas.

But it is also such a long-term issue that there is little incentive for any government to take risks with it - even one that believes it might win 15 years or more in power.

Tony Blair, however, has promised to finally sort out the country's pensions crisis.

But, amid claims of yet another split between the prime minister and Chancellor Gordon Brown over the way forward, it appears we may be looking at another fudge.

Retirement 'cliff edge'

The minister responsible for producing this week's green paper on pensions, Andrew Smith, has signalled that the first option is to make the current retirement age more "flexible."

He will dress up such a policy as offering freedom and choice for people who do not want to be pitched off the "cliff edge" of employment when they hit a fixed retirement age.

"We've got to get away from the idea of retirement as a cliff-edge, where on Friday you're a valued member of the workforce, but on Monday you're shuffled off to retirement and that's it.

"More and more people would like to move gradually into retirement," he has said.

Others, however, will fear this is a back door way of forcing people to work longer because of a shortfall in pension provision.

Thinking the thinkable

It also appears Mr Smith will back away from forcing employers to make pension contributions, a key union demand.

He may unveil a new watchdog to keep an eye on the private pensions industry - long after the horse has bolted, of course - and even, in true New Labour style, set up yet another, inquiry.

But radical, in other words risky, solutions do not appear on the cards.

This after the first New Labour administration pledged to "think the unthinkable" about just these sorts of issues.

All this comes against the background of a massive black hole at the centre of future pension provision, the scandal of private pension schemes and the abandonment of final salary schemes by more and more employers.

And one of the Chancellor's first acts, regularly attacked by the Tories, was to boost his income by removing the tax credit on dividends which has taken 5bn a year from pension funds.

Growing expectation

That has all combined to create a genuine sense of foreboding amongst middle aged voters.

There are even some signs that young voters may be becoming concerned over the issue.

The danger for the government is that by avoiding the radicalism that many believe is required to avert the looming pensions crisis, it will succeed only in alienating both sides in the argument.

The normally moderate TUC boss, John Monks, has already announced he is a "militant" when it comes to pensions and would be prepared to back action in support of change.

And there is the growing feeling that enough middle-income voters are concerned about their future that it could have a serious impact in the ballot box.

Meanwhile, it is claimed there has been yet another dispute between Gordon Brown and Tony Blair over the issue, with the Chancellor particularly opposed to a Royal Commission to investigate the issue.

This week's green paper has been hyped up as one of the key moments of Labour's second term.

But few people are now taking bets on Mr Smith's statement living up to that.


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04 Dec 02 | Business
10 Dec 02 | Business
13 Dec 02 | Business
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