The Conservatives have been quick to jump on the news that Gordon Brown was repeatedly warned by civil servants about the long-term impact of his £5bn-a-year raid on private pension provision.  Shadow Work and Pensions Secretary, Philip Hammond, is seeking an independent inquiry by the Government Actuary to establish the true cost to savers of the changes made by Gordon Brown in his very first Budget:

“Gordon Brown must explain to the House why he acted in defiance of his top civil servants who warned that his tax reforms would cost pensions funds billions, leaving a black hole in many of them.  The Chancellor has effectively concealed information surrounding these plans from Parliament for the last ten years.  The extent of disregard he has shown towards pensioners, past and present, is unbelievable. The Chancellor’s been telling us for the last ten years these tax changes didn’t have a negative effect on pensions funds.  The documents now prove this is not true.  An independent inquiry by the Government Actuary into the total cost of this stealth tax to Britain’s pensions funds is urgently required.  The way in which Gordon Brown ignored advice that these measures would undermine pensions funds, his persistent denial of what these papers now confirm, and the sneaky way this bad news release was managed, all pose yet more questions about Gordon Brown’s fitness for the highest office.”

This morning’s Times published the all-too-accurate warnings of civil servants about the likely impact of Gordon Brown’s proposed reforms:

  • "The lower paid would be worse off under the new rules
  • Pensioners due to retire would lose out immediately
  • Businesses would struggle to adjust to the change
  • It would cost pension providers £4 billion a year
  • Pension benefits would be cut
  • Shares could drop by between 6 per cent and 20 per cent
  • The value of existing pension funds could fall immediately by £50 billion
  • Local authority schemes would need topping up, leading to higher public spending
  • The Department of Trade and Industry would be “gravely concerned” about having to bail out pension schemes driven into insolvency."

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