(Lab):...I have news for Tory
MPs: the Government’s plan will cause monumental pain for the low
paid and those on very small occupational
pensions Millions who are non-taxpayers due to low
income will get sucked into income tax without any announcement
of a tax increase. Millions more, with just above average
earnings, will become 40% taxpayers over the five-year period.
The amounts will be eye-watering to the low paid...
(Lab):...I have
three points to make in response. First, it would have been
better for the Chancellor to have made it clear in his speech and
in the Red Book that the charge cap on expenses applies only to
default funds under automatic enrolment. Other
forms of pension where people opt for other funds under
automatic enrolment, or the many arrangements
that take place outside the automatic enrolment
arrangements, are not subject to the charge cap. It is up to the
provider and the member of the scheme to arrive at their own
provisions.
Of course, in practice the great majority of pension arrangements
are default schemes under automatic enrolment.
The number of schemes that have been taken up is testimony to the
success of the automatic enrolment introduced by
the last Labour Government. I think the default schemes are
popular because people simply do not want to tackle what is
inevitably a difficult decision. It could be characterised as
great faith in pension providers, but I would put my money on
inertia in the face of a choice for which most people do not have
any training or experience and where there is limited or no
independent advice...
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