Minister 'dodging blame for pensions blunder'

Ministers were accused yesterday of passing the buck for a statistical blunder that could slice billions from official estimates of the amount people are saving for retirement.

The Conservatives accused Andrew Smith, the Secretary of State for Work and Pensions, of "blaming everybody but himself" after serious flaws in the way contributions are calculated were exposed.

Downing Street denied a rift between the Department for Work and Pensions and the Office for National Statistics, insisting the ONS had apologised for the error. The ONS said it was sorry the statistics "had become the story".

Yesterday David Willetts, the shadow Work and Pensions Secretary, increased pressure on the Government, accusing ministers of imposing £6.5bn in stealth taxes on pension funds and making a "complete mess" of pensions policy.

Opening an Opposition Day debate on pensions, he told MPs: "We face a Labour environment for pension provision and what it means is less saving, lower-funded pensions and a poorer retirement for millions of British people.

"The effect of the tax increases and reduction in value of contracted-out rebates is to drive pensioners, now and in the future, on to means-tested benefits, and more dependency on welfare."

But Mr Smith accused the Conservatives of secretly planning to abolish the basic state pension, quoting a letter from Mr Willetts saying: "The vision of moving to a funded alternative to the basic state pension is a powerful and compelling one." Mr Smith told MPs: "That means their vision is to privatise the basic state pension.

"The dividing lines are clear. We believe in a partnership, in a balance between state and private funding. They believe in privatising the basic state pension." Mr Smith welcomed the decision of the independent Accounting Standards Board to delay the introduction of the controversial FRS 17 rules blamed for the closure of some final salary pension schemes.

The FRS 17 rules, planned to come into effect in December, had required firms to include a snapshot of huge pension liabilities in their accounts. But Mr Smith said new international rules in 2005 would allow accounts to reflect the long-term nature of pension funds.