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‘Bolt on’ pension plans under attack.

The IoD says that the proposals represent “a missed opportunity”, claiming that the long-term proposal to up-rate the minimum income guarantee will dissuade people from saving: “They will let themselves depend on the taxpayer in retirement instead,” the IoD said. It added that the proposal for a three-band national insurance rate will make the system even more complicated than it already is. Employers that don’t have occupational schemes will have an additional burden because of the need to consult with employees, nominate a “stakeholder” scheme and deduct employees’ contributions through the payroll system. “The government has limited itself to changes that can easily be bolted onto the existing national insurance and benefits system,” said Richard Baron, the IoD’s deputy head of the policy unit. “They should have been far more radical.” Actuaries Lane Clark & Peacock noted that group personal pensions do not appear to count as occupational schemes as far as these proposals are concerned, so companies offering such schemes will also have to offer their staff access to stakeholder pensions.

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