Pension tax breaks 'no answer'

The TUC general secretary says tax breaks benefit the rich

Increasing tax incentives for savers is not the way to solve the UK's pension crisis, the TUC has told the government.

The union body said it believed giving extra tax breaks to savers would benefit the rich rather than the poor.

At present, nearly half the money given by the government in pension tax relief goes to higher rate tax payers.

The TUC urged the government to compel employers and employees to pay into a pension, as a way to solve the crisis.

Influence

The TUC's intervention is aimed at influencing the deliberations of the government's Pensions Commission.

The commission has been asked to recommend ways to solve the UK's pension crisis, and is expected to produce its final report in late November.

We already have huge incentives to save for retirement, but they are not working Brendan Barber, TUC general secretary

Bodies such as the National Association of Pension Funds and Association of British Insurers (ABI) have told the commission that the state pension system needs to be reformed and tax incentives improved.

But the TUC is adamant that further incentives would not solve the pensions crisis.

The union body points to the US experience where pension tax breaks were improved but have not led to a significant increase in retirement saving.

"We already have huge incentives to save for retirement, but they are not working," Brendan Barber, TUC general secretary, said.

"Instead of the further help for the better-off that new incentives would provide, the government should phase in compulsory savings for employers and employees."