Saturday, 26 April 2014

Gordon Brown's stealth raid on British pensions

Following the publication of a report by the Office for Budget Responsibility, on 26 April 2014, Becky Barrow said this in The Daily Mail:
"In one of his first decisions as chancellor, Gordon Brown scrapped tax relief on pension firms’ dividends. The move is blamed for wrecking a once thriving industry and fuelling the closure of many final salary schemes...

Since 1997, the number of private sector workers with a defined benefit pension has collapsed from 5million to 1.7million. Official figures reveal that the tax grab has saved the Treasury, and cost workers, £118billion since 1997...

In 1997, 34 per cent of staff at private sector firms were in a final salary scheme. By 2012, this had slumped to just 8 per cent, just one in 12. Before 1997, a pension fund could receive £80 in investment dividends after tax and receive an additional £20 credit from the Treasury. But this top-up was abolished by Mr Brown in his Budget day speech of July 1997. He told the Commons: ‘Many pension funds are in substantial surplus and at present many companies are enjoying pension holidays, so this is the right time to undertake a long-needed reform'."
Ros Altmann, a former Downing Street pension adviser, said Gordon Brown's infamous raid on pensions marked ‘the beginning of the end of the gold standard pension that British workers could rely on from their boss’. She added:
"This is money that has come out of people’s pensions. It paved the way for the end of final salary schemes because it made them so much more expensive. They were suddenly unaffordable."
Laith Khalaf, of investment advisers Hargreaves Lansdown, said:
"It was a stealth raid which had a devastating effect on the UK pensions landscape. 
It sank many final salary schemes and dented the returns earned by people who had done the sensible thing and saved for their retirement."
Similarly, David Robbins, a senior consultant at pension advisers Towers Watson, said:
"It was a classic stealth tax. Any money taken out of defined contribution pensions is the saver’s problem, not the employer’s. It means people will be retiring with smaller pension pots."
In 2009, whilst he was shadow chancellor, George Osborne pledged to ‘reverse the effects of Gordon Brown’s pensions tax raid.’ He added:
"Gordon Brown’s disastrous tax raid on pensions heralded the start of the age of irresponsibility. So today I say we will reverse the effects of Gordon Brown’s pensions tax raid and get our country saving again."
Since then no change has been made.

James Coney, the Money Mail's editor, said this:
"It amounted to just three short sentences in Gordon Brown’s first budget as chancellor on July 2, 1997 but it became one of his most notorious deeds in office. Under the guise of introducing structural reforms to encourage investment, he abolished tax credits paid to pension funds and companies. It was a devastating move that has all but killed off private sector final salary schemes and devastated the bank balances of millions of retirees...

Back in 1997, pension funds were in surplus and had more than enough money to pay the incomes of retirees... It was only a decade later that it emerged that he was alerted before the budget that pension funds could lose £50billion overnight.

As the new figures from the Office for Budget Responsibility show, abolishing pension fund dividend tax relief has cost them £117.9billion between 1997 and 2014. Crucially, this figure relates only to the Treasury’s savings. The impact on pension savers is far more devastating. Each year the dividend payments that pension funds were stripped of would have been reinvested and grown. With even a modest rate of compound growth, the £2.3billion the Treasury saved in 1997 thanks to Mr Brown would now be worth around £5.5billion.

Using the same logic, one financial expert calculates that the total amount stripped from the nation’s pensions could amount to as much as £260billion...

Thousands of companies closed their lucrative final salary schemes, which promised to pay a retirement income based on an employee’s length of service and pay. These schemes found they could no longer afford the promises they made. Many shut...

Gordon Brown’s tax raid may have boosted the Treasury’s coffers, but it devastated the pension promises made to a generation of workers and changed the way we save for our retirement forever."
That's the 'prudent Chancellor' for you. 

That's what the workers voted for. Mind you, after Thatcherism and its big brother, globalism, had sold off British industry, downsized what remained and hived off much of the remaining work to foreign fields, what else were they going to do?

Some naively imagined that Blair and Brown would punish the Tories for their Sheriff of Nottingham behaviours. Not a bit of it. Not only did they carry on where Conservatism left off, they also imported four million foreigners during their thirteen years in office. Those who came from the former Communist countries of eastern Europe seemed to hoover up most of the jobs that were left.

As the unusually honest Labour MP, Frank Field, told us in the 1 February 2009 edition of The Daily Express:
"His claim to have provided British jobs for British workers is as hollow as it could be... I have been calling on ministers for years to cut down on the number of people coming here to work. No Government has had more warnings. Of the three million jobs created in the last decade, nine out of 10 have gone to people who are not British.”
Those you vote for are at war with us, ladies and gentlemen. It doesn't matter who's in power, A, B or A + C, you're going to get shafted.

If you want to get even to some small extent, vote for UKIP in the forthcoming European elections. Let yourselves see what power the British people voting in concert still have and terrify those who have terrorised us for so long.

Things won't change permanently until a revolution cuts the cancer out but a corrupt executive punished by electoral retribution will see the first shot fired in that revolution.

And those who want their country back will be off to a good start.

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