Page last updated at 13:29 GMT, Tuesday, 6 October 2009 14:29 UK

Tories list their pension plans

By Ian Pollock
Personal finance reporter, BBC News

Shadow chancellor George Osborne gives his keynote speech to delegates on the second day of the Conservative Party Conference on October 6, 2009 in Manchester.
Mr Osborne proposed a cap on some public sector pension payments

In his speech to the Tory faithful in Manchester, shadow chancellor George Osborne suggested much on pensions but gave few firm proposals.

He clarified Monday's proposal to bring forward the already-planned increase in the state pension age.

Under long-standing Labour plans, the state pension age for women will rise gradually from 60 to 65, over the 10-year period from 2010 to 2020.

Then, for both men and women, it will keep on rising in stages: to 66 in 2024, to 67 in 2034 and 68 in 2044.

Under the Conservatives, that first stage may be brought forward - hitting 66 for men but eight years earlier in 2016, and similarly affecting women four years earlier than currently planed, from 2020.

This sidesteps the initial objection, spotted by numerous experts and observers, that the first version of the Tory plans, revealed in briefings to journalists on Monday evening, might penalise some women.

No promise

It had appeared that in 2016, women who were then 63, and about to claim their state pensions, would suddenly find they had to wait another three years before being allowed to do so.

That potential glitch in the Conservative plans has now disappeared.

It also means that the equalisation of state pension ages will still take place in 2020 - but at the higher age of 66 rather than 65.

But this big change is certainly not a promise.

The Conservatives say these potential start dates are the earliest they may come into effect.

So in fact they may come in later and not be much different from Labour's plans after all.

And the whole plan depends on it being approved by a fresh review of the state pension age.

Dog-whistle politics

One thing that will not change under a Conservative government is the plan, which they supported anyway, to link state pension increases to the rise in average earnings rather than the rise in inflation.

The time has come to find a way to put a £50,000 cap on public sector pension payments
George Osborne

However, the Tories blew another political dog-whistle on public sector pensions.

"The time has come to find a way to put a £50,000 cap on public sector pension payments," said Mr Osborne.

The Conservative press office later said this meant the government "should find ways to cap the biggest government pensions, including those for senior civil servants, local council executives and Quango managers".

"This cap should prevent any taxpayer-funded increase in senior government pensions already worth over £50,000 a year, and stop all taxpayer-funded pensions for these groups in future exceeding £50,000 a year.

"This would reduce the growth of public sector pension liabilities by hundreds of millions of pounds over the next decade."

Changing the rules?

This will be tough to do unless the Conservatives are brave enough to change the rules, with a few highly-paid local government and civil service staff in their sights.

In general, pensions already earned, or already in payment, are sacrosanct unless your employer goes bust and leaves the pension fund with a deficit.

Stopping someone receiving any further increases to their £50,000 plus pensions already in payment - for instance via inflation proofing - might breach their pension scheme promises, not to mention their human rights.

Likewise, someone may still be working but may have already have accrued a potential pension worth more than £50,000.

Will the Conservatives change existing public sector pension schemes to stop further pension accrual above that level while some scheme members are still in employment?

That seems to be the idea.

MPs pensions

Even more vague was a jibe at what George Osborne called Gordon Brown's "tax raid" on pension schemes.

He was referring to Labour's decision taken in 1997, when Brown was the new chancellor, to abolish the system under which occupational pension schemes could reclaim the tax they paid on income from share dividends.

This has cost those schemes an estimated £5bn a year, according to calculations by some pension experts.

Mr Osborne, to much applause, said the Tories would "reverse the effects" of that, but did not actually say how he would do it.

He does, however, have MPs' pensions in his sights.

The very generous final-salary scheme for MPs is already being reviewed on the orders of Gordon Brown last February, with a view to making it cheaper to run.

Mr Osborne promised it would be closed to new-joiners, just like most pension schemes in the private sector.



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