Labour pensions policy failing

12 April 2012

THE Government's flagship plan to prevent millions of people living an impoverished old age is failing, the Tories have claimed. Stakeholder pensions were launched in April last year as a cheap, flexible and easily understandable way to save for old age. They were aimed at the five million who earn between £10,000 and £20,000 a year. But the Tories say only 2% of the target group have taken them up.

The claims will add to fears that a generation of employees is facing a cash-strapped retirement, having to rely on State handouts. Labour hoped stakeholder pensions would encourage workers to save and fill the void left as many firms close their traditional schemes in cost-cutting measures.

Official figures show that 815,000 stakeholder pensions have been sold. But only 100,000 were bought by those in its target group, the Tories believe. Almost 400,000 plans were opened by workers earning less than £10,000 or more than £20,000, and almost a quarter by people who had previously been saving in other schemes.

Tory pensions spokesman David Willetts said: 'We all hoped stakeholders would plug the gap, but the evidence is they fall far short of providing a solution to our pensions crisis.'

Meanwhile, the leaders of the postal workers' union have awarded themselves remuneration packages worth a total of £1m - as their members face 30,000 job losses. Senior officials at the Communication Workers Union received pay and pensions deals worth an average of more than £140,000 each last year.

The remuneration packages, which a CWU spokesman described as 'admittedly huge', sparked allegations of hypocrisy. A spokesman for the Institute of Directors, whose members have faced fierce criticism from the unions over 'fat cat' boardroom wages, said: 'These union leaders are guilty of double standards. But it is up to the trade union members to keep an eye on their bosses.'

However, the CWU has voted for a campaign including industrial action in response to the threat by Consignia, which runs the Post Office, to cut 30,000 jobs following a £ 1.1bn annual loss.

Recently filed accounts reveal that Kevin Shaw, a former postman who is an assistant secretary on the CWU's health and safety committee, received a remuneration package of £210,000 last year. Shaw, who is in his fifties and works at the CWU's London headquarters, declined to comment. The accounts show that Shaw and six other CWU leaders received pay and pension deals collectively worth more than £990,000 last year.

Meanwhile the union ran up a deficit of expenditure over income of more than £ 1.3m - while over the past two years the average annual pay rise of the CWU's 300,000 members has been just 2.7%.

A CWU spokesman last night defended the remuneration packages, saying: 'It is a lot of money, there's no doubt of that, but we make no excuses for it. The reasoning behind the payments is that a lot of our officials started off as postmen on very low wages before they were elected. In order for them to retire on a decent pension, the union tops up the sums as if they had been union employees all along. Right, wrong or indifferent, that's the way it is.'

The disclosure of the inflation defying deals comes only weeks after union leaders criticised the financial package paid to Sir Christopher Gent, chief executive of Vodafone. He was given shares worth £1.6m on top of his £2.4m salary, despite Vodafone's record pre-tax loss of £13.5bn. TUC general secretary John Monks said at the time: 'Employees, who are being hit by cuts in their pay through changes to their pension schemes, will take a very cynical view of boardroom excess.'

A spokesman for the TUC declined to comment yesterday, saying: 'It is a matter for the individual unions.'

The remuneration packages for CWU leaders have mostly been paid into pension funds. Of Shaw's £210,000 package, £165,000 went directly into his pension fund. By paying large sums as pension, the union can legally avoid National Insurance contributions of more than 11% that would otherwise be deducted from salaries.

Allan Leighton, chairman of Consignia, declined to comment on the union leaders' pay and pension packages.

CWU officials are not the only ones to receive inflationbusting pay increases . TGWU leader Bill Morris saw his package for last year rise by more than 8% to £97,629. His deputy Margaret Prosser received a similar rise, up from £75,028 to £81,296.

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