Labour's pensions overhaul ‘risks fresh wave of unemployment'
Paul Cuff, co-head of Britain's biggest independent pension consultant XPS Pensions, cautioned the Work and Pensions Minister that rushing an increase in the level of employer pension contributions could fuel further job losses in the fragile labour market.
'Raising minimum levels of required contributions is another cost burden for employers that are under a lot of pressure. We all know that, especially following something like the National Insurance increase,' he said.
'It could have actually quite negative effects on the economy if it puts more financial pressure on companies and reduces their ability to invest or hire. It could be counterproductive.'
Mr Cuff added said it was 'quite possible' the move would trigger a surge in unemployment and that the Government and employers are in 'quite a difficult place' on the issue.
The warning comes after Ms Kendall launched a new pensions commission last month to tackle the fact that 'tomorrow's retirees are on track to be poorer than today's'.
Employers must typically contribute a minimum 3pc to their automatically enrolled workers' pensions, while employees put in a minimum of 5pc of their pre-tax salary – 8pc in total.
But auto-enrolment savings rate needs to be around twice as high – somewhere in the mid-teens – to offer adequate savings in addition to the state pension, Mr Cuff said. This means employers would face a significantly higher burden.
'We have to find a way of getting there somehow, otherwise we're kicking it down the road for another 20 years, but it will come back to haunt us one day. It's a very difficult problem,' he said.
Job market under strain
The Government has warned that almost half of working age adults are still not saving at all for their pension. This is despite the auto-enrolment policy boosting savings rates for eligible employees to 88pc, from 55pc in 2012.
Britain's job market is already under strain, with Ms Reeves' £25bn tax raid on employers and another inflation-busting minimum wage rise blamed for slowing hiring.
Unemployment is at a four-year high of 4.7pc, while hiring has been in decline for three year – the longest period on record in the last two decades.
Mr Cuff urged the Government to set out a plan and very gradually increase mandatory saving rates over several years.
It comes amid growing speculation that Ms Reeves will hit pensioners with National Insurance contributions for the first time as she seeks to plug a gap of as much as £50bn ahead of the autumn Budget. Currently, anyone working past the state pension age of 66 is exempt from the levy.
Ending this tax break for pensioners would raise £1.1bn a year by the end of the decade, according to the Institute for Fiscal Studies.
Steve Webb, the former pensions minister, said: 'Because it affects people over pension age, you could just about say 'well, it's not working families, it's not the manifesto pledge, it's pensioners who just happen to be working'. You could imagine that happening.'
Gordon Brown, the former prime minister, also suggested this week that it was a potential revenue raiser the Chancellor could explore.
However, Baroness Ros Altmann warned the Chancellor would likely pay the price through lower employment rates for pensioners. 'What we need and want is to encourage more older people to keep working,' she said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
BBC News
an hour ago
- BBC News
AntiSocial Asylum hotels
Anger has flared outside hotels used to house asylum seekers. Protestors say they are worried about illegal migration, cost to the taxpayer and a lack of consultation, but one issue seems to spark even more concern - the safety of women and children. Opponents have accused protestors of racism and whipping up hate. Is there any evidence that asylum seekers are more likely to commit sexual offences? We trace the clamour for more data to answer that question. Police have been given new guidance on disclosing the ethnicity and nationality of suspects in criminal cases - especially high profile ones. What might be the effect? And why are so many asylum seekers currently housed in hotels anyway? We hear how the system is supposed to work and how it's evolved. Presenter: Adam Fleming Producers: Simon Tulett, Natasha Fernandes, Emma Close and Tom Gillett Editor: Penny Murphy Production coordinator: Janet Staples Studio engineer: Annie Gardiner
Times
an hour ago
- Times
Times letters: How inheritance tax changes affect growth
Write to letters@ Sir, You argue in your leading article 'From Me to You' (Aug 14) that it is 'morally wrong' to levy inheritance tax on 'those who have worked hard throughout their lives to earn something to pass onto the next generation', but the biggest slice of inherited wealth is in the form of a house sale. The amount of income used to acquire a house depends mainly on the size of the mortgage at the time the house was bought — that is, its historic value — not on what it is sold for as part of probate, its current value. An adjustment for inflation may be appropriate, but there is no reason a house should be tax-exempt because its deceased owner 'worked hard to acquire it'.Peter Curwen Leeds Sir, For Rachel Reeves, wealth is a sin and she intends to tax it like other sinful behaviours. Sin taxes have a long history in reducing activities that politicians disapprove of. Sin taxes on smoking, drinking and driving have succeeded. Inevitably, as our sinning diminishes, so do sin tax revenues. Tobacco and fuel duty revenues are both down. Alcohol duty revenue is up, marginally, but on lower per capita consumption because tax rates on stronger booze have increased. Sin taxes on wealth will have the same result. There will be far less of the sinful activity of wealth creation, and eventually tax revenues will fall. The worst sinners are already fleeing our shores. Inheritance tax revenue will disappear as people stop leaving wealth to their children. As you have reported (Jul 28), capital gains tax revenues are already falling, from £14.6 billion in 2022-23 to £12.1 billion in 2023-34 as the sinners prepare to repent. What's more, with far fewer of the '1 per cent club' who pay 30 per cent of total income tax, we can all look forward to even higher tax bills ReeceLondon N4 Sir, I wonder if Rachel Reeves has fully considered the implications of subjecting pensions to inheritance tax. Having worked for more than 40 years and contributed to a pension in the belief that this would relieve the state of any responsibility for me in old age, I am now confused. Obviously I don't know how long I may live, but in the hope it may be a reasonably long time I have invested in UK stocks and shares, both to protect my family and to promote UK stocks and shares. All of us have benefitted, but now I must re-evaluate. Several of my options include selling the UK stocks and shares. Reeves has said she wants pension funds to invest more in the UK stock market, but how will her policies encourage that?Paul Mitchell Thédirac, France Sir, The proposal to 'tighten' rules on the seven-year exemption to IHT on gifts is odd ('Budget may tighten rules on inheritance tax', Aug 13). We seem to have forgotten the reason for this relief, which is to encourage growth. Essentially, it is better for growth for elderly people to pass on assets to younger people who will use them. A simple example is an older person taking cash from their bank and giving it to their child to buy a house. This results in work for estate agents, surveyors, solicitors and contractors, as well as a tax contribution in stamp duty and VAT. For a pro-growth government, to remove the incentive to give these gifts seems HardsBlakeney, Norfolk Sir, John Stewart says (Thunderer, Aug 13) that the proliferation of cycle lanes on main roads is because priority is given to cyclists making longer trips, at the expense of people using side-roads for shorter journeys. The reason priority is given to main roads is that they are where cyclists are in most danger. In many places outside London, it is impossible to make even short journeys without using main roads. I agree, though, that the design of cycle lanes needs review. Bumps and bollards that separate cycle lanes from vehicle lanes are hazards, as are jay-walking pedestrians and car passengers opening doors without looking. Some cycle lanes at junctions are so labyrinthine that they are difficult for both pedestrians and cyclists to navigate. The sad fact is that at present some cycle lanes are so badly designed that it is often safer, and certainly quicker, to avoid SpenceSale, Cheshire Sir, The residents of Streatham Hill are due to suffer more than a year of roadworks as Transport for London and Lambeth council reduce the motor vehicle capacity of the A23 to a single lane. The reason is that it is safer for cyclists and pedestrians to create a segregated cycle lane with floating bus stops and reduce access from residential side roads. I believe that if they wanted to keep everyone safe — and save money — they could ban cyclists from this stretch of the A23 and direct them to the low-traffic neighbourhood along the southbound carriageway. One of reasons the council gave for creating the LTN was that it would make it safer to cycle and CrillyLondon SW16 Sir, Harry Wallop writes (Business, Aug 15) about the poor prospects for delivery riders in the gig economy. These riders and others in such jobs will, at the end of their working lives, have little if any pension and will be dependent on the state. The people running these companies will have retired comfortably and left taxpayers to look after their former workers. Bill ParishBromley, Kent Sir, Sadly, the stone coffins and skeleton that have been on view in the northeast corner of Sherborne Abbey for the last century cannot be those of Alfred the Great's brothers (letter, Aug 14). They lie immediately beneath a 14th-century tiled pavement, within a chantry chapel, and are more likely to be those of a late-medieval abbot. When they were uncovered, in 1925, during the making of WD Caroe's new Lady Chapel, no archaeologist was there to study or record them. If the present vicar wishes to find the burials of Alfred's brothers, I suggest a careful research excavation on either side of the high Tatton-BrownSalisbury Sir, The discussion about the remains of his family brings into focus the location of Alfred himself. After his death, in 899, he was buried in Old Minster, Winchester. He was then moved to New Minster, the church built by his son, King Edward, as the dynastic focus for the family. The Norman destruction of both minsters led to the building of Hyde Abbey, just outside the walls of the city, as the 'final' resting place for Alfred, Edward and other family members. Sadly, Hyde Abbey fell victim to Henry VIII. Alfred's grave was lost until 1788, when the building of a bridewell on the site led to its rediscovery. The authorities allowed the bones to be lost around the building site. So we can now say with some confidence that the bones of Alfred and his immediate family lie scattered and shattered adjacent to the entrance to River Park in Hyde. We have long lobbied Winchester city council for a proper commemoration of Alfred and the story of the abbey in Hyde Gate, almost the last remaining original building within the abbey FennellFounder, Hyde900Winchester Sir, Further to your article 'Rolls-Royce's UK plans go nuclear' (Business, Aug 14), I have no doubt Rolls-Royce's aero-engine business will remain remarkably successful but its enthusiasm for land-based small modular nuclear reactors (SMRs) is commercially misplaced. Firstly, SMRs are essentially experimental prototype scale-ups. I would be surprised if savvy companies such as Google and Amazon were contemplating reliance on experimental tech. Secondly, authoritative research by academics at the University of Pennsylvania, in a paper published in May 2022, demonstrated that SMR radioactive waste is harder to handle than waste from Gigawatt-sized nuclear David LowryInstitute for Resource and Security Studies, Massachusetts, US Sir, Alice Thomson calls for 'honest but calm dialogue' about migration (Comment, Aug 13). She concedes that 'some Islamic countries don't share western values', but understates in my opinion how big a barrier that is to integration. The schism between Catholicism and Protestantism endured for BickleyHuntingdon, Cambs Sir, In response to your question 'Which artist best captures the true spirit of Britain — in a single frame?', (Times2, Aug 15), surely Banksy's Girl with Balloon, his powerful 2002 mural, best encapsulates the nation's sentiments in these troubled times. It was voted the nation's favourite in 2017 and, as well as being one of his most famous works, it is also one of Banksy's most optimistic, as the original mural was accompanied by the words: 'There is always hope.'Adrian BrodkinLondon N2 Sir, Your excellent article overlooked Walter Sickert. Over his long and prolific career, he painted ordinary British people at the music hall and in grimy bedsits. He reinvented himself more than once and has influenced and inspired many who came later. My choice would be BostonKingshill, Kent Sir, David Hockney has spent a great deal of his time on British landscapes, most notably Garrowby Hill, and his innovative artwork on the iPad is ClarkeRye, E Sussex Sir, Anthony Roberts (letter, Aug 14) brings to mind the warning attributed to Henry Longhurst that 'If you call on God to improve the results of a shot while it is still in motion, you are using an outside agency and subject to appropriate penalties under the rules of golf.'John Murray Compton Chamberlayne, Wilts Sir, A friend of my parents had his bicycle stolen. It was found two days later and, being a good Catholic, he went to church to thank St Anthony. On leaving church, he found that it had been stolen YoungSouthampton Sir, Public statues in London have always been controversial, for many reasons (News, Aug 8, and letters, Aug 13 and 14). In 1937, a decision was made to site the memorials to Admiral Jellicoe and Admiral Beatty in Trafalgar Square, which required moving the statues of General Napier and Major General Havelock, and there had even been discussions about moving William IV from his plinth to an island at Virginia Water. It was all too much for Sir Patrick Duff, secretary of the Office of Works, who was still reeling after controversies about the statue of Field Marshal Haig on Whitehall. In a letter to the first commissioner, Sir Philip Sassoon, in January 1938, Duff fumed that the best site for all statues was at the bottom of the CrellinThorner, W Yorks Sir, Marion Brown's letter (Aug 13) revived an old misapprehension of my own. As a child I had a box of watercolour paints with the printed name of the tint under each pan. Owing to inconsistency in the printing I was convinced for many years of the existence of the colour Clive DorrPlymouth Write to letters@
Daily Mail
2 hours ago
- Daily Mail
Human rights watchdog warns police to rethink 'heavy-handed' Palestine protest clampdown amid fears it could have a 'chilling' effect on free speech
Britain's human rights watchdog has warned against the 'heavy-handed policing' of Palestine protests amid fears it could have a 'chilling' effect on free speech. The Equality and Human Rights Commission (EHRC) has written to Home Secretary Yvette Cooper and Met Police commissioner Sir Mark Rowley to remind them that the 'right to protest is a cornerstone of any healthy democracy'. The letter, from EHRC chairwoman Baroness Kishwer Falkner, said the notion that a peaceful demonstration could attract disproportionate police attention 'undermines confidence in our human rights protections'. Baroness Falkner said any interference with protest rights 'must be lawful and assessed case-by-case'. She added: 'Heavy-handed policing or blanket approaches risk creating a chilling effect, deterring citizens from exercising their fundamental rights to freedom of expression and assembly through fear of possible consequences. 'This concern extends beyond those directly affected by police engagement to the broader health of our democracy, because the perception that peaceful protest may attract disproportionate police attention undermines confidence in our human rights protections.' The letter, from EHRC chairwoman Baroness Kishwer Falkner, said the notion that a peaceful demonstration could attract disproportionate police attention 'undermines confidence in our human rights protections' Baroness Falkner also raised concerns about 'reports of police engagement with individuals participating in forms of protest that are not linked to any proscribed organisation'. The commission referenced a report by the Guardian newspaper about a woman said to have been threatened with arrest under the Terrorism Act for holding a Palestinian flag and signs saying 'Free Gaza' and 'Israel is committing genocide'. The woman was reportedly told by police that her demonstration in Canterbury, Kent, in July expressed views supportive of Palestine Action, an organisation which has been banned by the Government. The woman said neither of her signs mentioned Palestine Action and that she had told police she did not support any proscribed organisations. Kent Police confirmed it had 'received correspondence from a legal firm representing a person spoken to by officers in Canterbury on July 14 2025' after the Guardian reported the woman is taking legal action against the force. The EHRC said Government and police authorities must 'ensure that all officers receive clear and consistent guidance on their human rights obligations' when it comes to protests. 'This guidance should ensure that the appropriate balance is maintained between public safety and the protection of essential human rights,' Baroness Falkner added. Palestine Action was proscribed by the UK Government in July, with the ban meaning that membership of, or support for, the group is a criminal offence punishable by up to 14 years in prison, under the Terrorism Act 2000. More than 500 people were arrested last weekend on suspicion of displaying an item in support of a proscribed group, as demonstrations took place in central London. Downing Street has described Palestine Action as 'violent' and said it has committed 'significant injury' as well as criminal damage, adding that evidence and security assessments shared in closed court supported its proscription. Palestine Action said Downing Street's accusations were 'false and defamatory' and 'disproven by the Government's own intelligence assessment'. Asked for their response to the EHRC letter, the Home Office referred to Ms Cooper's previous statement about last week's march, in which she said: 'The right to protest is one we protect fiercely but this is very different from displaying support for this one specific and narrow, proscribed organisation.' The Metropolitan Police declined to comment when asked for their response to the letter. It comes after a chaotic London march last Saturday saw more than a staggering 500 activists arrested - bringing the total to over 700 since July 7, when the group was proscribed. During a day of mayhem and farce, Left-wing protesters swamped London's Parliament Square on August 9 in support of the organisation, which was proscribed by the Government last month as a terrorist group. Hundreds held placards declaring 'I oppose genocide. I support Palestine Action' in deliberate 'idiotic' acts of law-breaking designed to overwhelm police resources and the courts. Later that day, the Metropolitan Police announced more than 360 people had been detained following the scenes of disorder - at an estimated cost of about £3million. However, in an update on August 10, the Met said the number of total arrests had skyrocketed to 532 - with 522 of these being for people allegedly displaying placards supporting the proscribed terror group. Protesters were accused of a 'colossal' waste of millions of pounds of taxpayers' money after seemingly getting deliberately arrested by officers. Yesterday, the Metropolitan Police announced that a further 60 people will be prosecuted for 'showing support for the proscribed terrorist group Palestine Action. Stephen Parkinson, Director of Public Prosecutions, said: 'The decisions that we have announced today are the first significant numbers to come out of the recent protests, and many more can be expected in the next few weeks. We are ready to make swift decisions in all cases where arrests have been made. The public has a democratic right to protest peacefully in this country, and I understand the depth of feeling around the horrific scenes in Gaza. 'However, Palestine Action is now a proscribed terrorist organisation and those who have chosen to break the law will be subject to criminal proceedings under the Terrorism Act. 'When protest conduct crosses the line from lawful activity into criminality, we have a duty to enforce the law. 'People should be clear about the real-life consequences for anyone choosing to support Palestine Action. A terrorism conviction can severely impact your life and career – it can restrict your ability to travel overseas and work in certain professions. 'I urge people to think very carefully about their actions at protests. Anyone who chooses to disobey the law will have to face the consequences.'
