Safety valves needed to solve pension crisis

Wednesday, October 19, 2005

The shadow trade and industry secretary has called for a reform in the pension system, saying there are "no safety valves in place".

Conservative MP David Willetts has said that a radical change is needed to follow other countries such as Japan and the USA.

And the minister put forward ways in which he believes the system can be improved to bring it into line with the quality services offered in countries with similar substantial pension promises.

"[If a] company is taking… steps to pay off a deficit then there is surely a case for recognising this cost in the tax system rather than penalising such corrective measures as they are at the moment," he said.

"[Secondly] companies and their pension schemes could be given the option of paying the government to take over the responsibility for the contracted out guaranteed minimum pension which they have built up over the years."

Mr Willetts claimed that without these - or similar measures - being taken, the country's businesses would find they are spending all their available resources tackling the pensions crisis and thus not able to expand or benefit the economy.

Last night, there were angry reactions to the government backing down over an extension of the pension age for current public servants, despite prior insistence that it should be furthered to 65.

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