The process worked like this:
A pension fund owns some shares in a company who pays a dividend. Normally this is taxable, but pension funds get the tax back.
Well Gordon removed that.
After a long battle under the Freedom of information act papers have now been released, you can find the main page here listing all the documents.
What is clear is that the poorest pensioners were going to be hit hardest and that far from being a tax on pension funds alone it would force companies to reduce pension benefits or pay an effective stealth tax.
Now we know Gordon was warned of the danger.
Clearly Gordon Brown is a chancellor who will fritter away tomorrows wealth for today's headlines.
Update 11:12
The Times apparently was the paper that pushed for the Freedom of Information act request, and has this article here. Below is a damning extract:
Documents that were released to The Times under the Freedom of Information Act show that officials told Mr Brown:It's not look good for Gordon Brown this morning.
–– 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
6 comments:
it wasn't looking good for Gordon yesterday either, or the day before ... or the day before that/......... in fact ever since people realised that he wasn't a prudent chancellor but a spendthrift(our money too) and the budget sleight of hand was the final nail in the coffin IMHO. He may become PM because the electorate cannot stop it, but it'll be all doom and gloom thereafter!
Maggie Thatcher Fan, Yes,today is not a good day for Gordon Brown, and tomorrow isn't looking good either!
I think a lot of us have known that GB's pensions raid was a tipping point on our pension schemes going down the pan. However this is rather damning.
The trouble is, far too many people vote Labour out of tradition rather than consideration.
Delicolor, Well, yes there is that and the political climate. There was also a lot we did to make ourselves (that is the Conservative party) unelectable.
While Gordon Brown's "pension tax grab" was ill advised you greatly exagerate its impact. Equities at peak accounted for less than 70% of most funds assets, they yielded less than 4% and the tax grab amounted to less than 15% of that income stream. This means the impact on funds was less than 1%pa or less than most funds annual transaction costs! In any event where were the conservative party's comments when this so called raid took place - all I heard was a deafening silence!
If you are looking for a culprit for the problems of the pensions industry look no further than Mrs Thatcher. Under her administration pension regulations were enacted which encouraged companies to take massive pension holidays and even raid the pensions piggy bank to an extent many times more damaging than Gordon Brown's tax grab.
Put the blame where it belongs.
Anonymous @ 7:24 PM, April 18, 2007, I see, so you are saying the treasury actuaries were wrong?
Not very convincing I am afraid.
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