Pensions 'could be Labour's poll tax'

Tony Blair was warned yesterday that the pensions crisis could become "Labour's poll tax" amid reports that ministers plan a fresh raid on better-off workers' pension funds.

Union leaders forecast a wave of militancy over the number of firms closing final-salary pension schemes, leaving many employees with lower retirement funds than they expected. Scottish Widows, a pensions provider, last week became the latest big company to announce its staff scheme was closing.

Removing the 40 per cent tax break paid to 2.8 million top-rate earners on their pensions investments is believed to be among the ideas being considered for next month's Green Paper on pensions reform.

Frank Field, the former social security minister, is leading calls for radical action by the Government to avert a "meltdown" in the pensions industry. He told GMTV: "These are decisions which are going to be made out there by thousands of companies. So I think it's going to be worse than the poll tax, bigger in how it's going to influence people's behaviour."

John Monks, general secretary of TUC, said he was not generally in favour of strikes: "but on protecting pensions I'm very much a militant".