Philip Booth writes for City AM in response to the question: Are the government’s plans to introduce flat rate state pensions a welcome improvement?
There is merit in bringing simplicity to the state pension system. But the coalition has allowed the left of the Liberal Democrats to take over this policy area, with damaging consequences. A great virtue of the UK’s pension system was that it allowed people to opt out of part of the state pension and make private provision. Gradually, Gordon Brown undermined contracting out, and the coalition is hammering the last nails in the coffin.
Under these new rules, the government will effectively raise taxes by spending money on higher state pensions today that would have been saved in private funds for the future. It’s a pity market-oriented members of the coalition could not have persuaded Steve Webb to introduce a modernised form of contracting out in order to promote private saving, rather than loading future generations with more liabilities.
Read the full article here.