Tory promise over pensions equality

The Conservative Party will today unveil its latest populist policy for the general election by pledging to give all workers the same pension rights as their "fat-cat" bosses.

David Willetts, the shadow Work and Pensions Secretary, will announce that a Tory government would withdraw tax relief from companies that failed to open their pension scheme to all their employees.

In a speech to the National Association of Pension Funds annual conference, Mr Willetts will also reveal plans to scrap the Treasury's proposals to cap individual pension funds at £1.4m. With more than 45 per cent of all final-salary pension schemes now closed to new members, a Tory pledge to tackle the problem is certain to prove popular among voters.

Many firms allow senior management to continue joining their schemes while excluding those lower down the ladder, while some have separate funds for managers.

The Conservatives propose removing current tax relief, worth up to 40 per cent, from a company's pension scheme if it fails to offer exactly the same access to all members of staff.

The scheme is based on similar rules in the United States, where tax relief is conditional upon all workers being given an equal opportunity to join a firm's pension fund.

Gordon Brown, the Chancellor, announced in December that the Government intended to impose a £1.4m cap on individual pension funds, replacing the earnings cap applied at present. The Prime Minister and the Lord Chancellor are to be exempt from the cap.

Ministers claimed that the proposal, which is expected in the forthcoming Pensions Bill, would hit only 5,000 extremely rich employees. Mr Willetts said that independent estimates had shown that up to 600,000 people could be affected.