Tax breaks no answer to pensions' crisis, warns TUC |
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Sat, 08 Oct 2005 11:05
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LONDON - Providing lucrative and unreasonable tax breaks is only going to complicate the pensions issue and is not the way to go about solving it, the Trades Union Congress (TUC) has warned the government.
The organization released a new report titled ‘Expensive, ineffective and unequal’ and said that providing tax incentives would broaden the gap between the rich and the poor and would benefit the well-off in the long run. The report also said that such steps would prove to be expensive for the exchequer and increase inequalities in the already muddled issue. The report also put forth the same argument that the Sandler review had espoused, “There is little evidence to suggest that tax incentives have a significant impact on overall savings levels, especially among lower-income groups,” it said.
The TUC is suggesting that the introduction of compulsion and a better state pension would help significantly. The report adds that the incentives are meaningless because 13 percent of full-timers and 16 percent of part-timers do not contribute to the pensions. It is generally accepted that bigger employee contributions are met with bigger ones from the employer.
TUC general secretary Brendan Barber was emphatic that the new schemes would not work, "New pensions incentives will be expensive, won't work and will increase inequality. We already have huge incentives to save for retirement, but they are not working. Instead of the further help for the better off that new incentives would provide, the government should phase in compulsory savings for employers and employees," he observed.
The Pensions Commission is due to submit its final report on November 30.
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