Pensions: will they twist our arms?

LAST WEEK the Chancellor accepted the pleas of pension providers that while pensions are taxed as income the contributions should be fully tax-exempt, and that means counting the contributions as deductions from taxable income.

But this week the Government will publish its long-awaited paper on the future of the welfare state, including the state pension, the state earnings- related pension, and the need for private-sector pensions to ensure that anyone who can afford it can buy a pension to keep them out of poverty in old age.

Central to the debate is whether employees, and their employers, should be obliged to contribute to these universal private pensions.

In the meantime, anyone who can afford to do so would probably be well advised not to wait, because the new stakeholder pensions are likely to be modest in scope. Anyone worried about the risk of paying excessive charges for a de luxe pension plan should consider buying a pension from one of the new generation of direct pension sellers such as Direct Line, Virgin, Scottish Widows, GA Direct or Eagle Star Direct. The last named can be contacted by calling 0800-776666 or sending off the coupon on page 13.