Peter Thompson, chairman of the National Association of Pension Funds, which represents the major providers, yesterday attacked the Government for not taking pensions seriously enough.
He told the NAPF annual conference in Brighton: "The Chancellor seems to think we should all have a long, healthy and poor retirement. Maybe this is in tune with his Puri- tan principles."
Alistair Darling, the Secretary of State for the Department of Work and Pensions, is expected to reply today with a speech which will remind the conference that the Government is committed to sweeping away red tape and introducing a series of proposals to make it easier to save.
But this is unlikely to appease Mr Thompson, who added: "Last month's Budget was a disappointment. Another missed opportunity. Not a mention of pensions, let alone of employer-sponsored pensions, nor indeed of saving at all. Instead, an increase in direct taxation on employers and employees. No recognition of the fact that, whilst one of the causes of the increased financial needs of the NHS is improving life expectancy, the flip-side of that is the need for increased saving for retirement.
"The NAPF has for years, in our annual Budget representations, asked Governments for a tax structure which treats long-term savings more favourably than short-term discretionary savings. If you are being asked to lock your hard-earned cash away for 30 years or more, and then to have to buy an annuity at the end, you should receive more favourable tax treatment than you do on your short-term savings, which you can draw out at any time and spend on whatever you like.
"One suggestion which the Government may wish to consider is to extend the principle, already adopted for stakeholder pensions, of giving tax credits rather than just tax reliefs."
Mr Thompson went on to criticise "the thorny topic of FRS 17", referring to the new accounting standard which forces companies to add pension surpluses to – or deduct pension shortfalls from – their annual profits. "FRS 17 is having a much greater effect on pension schemes than either the Accounting Standards Board or the Government expected. It has been a source of continuing concern to many of our members and has, whether correctly or otherwise, been publicly blamed for the closure of some defined benefit pension schemes," he added.
Mr Thompson also announced that Christine Farnish, director of the FSA's consumer division, will take over as chief executive of the NAPF on 1 July.Reuse content