Labour's betrayal over pensions

I am becoming increasingly cynical about New Labour. It is not my province to comment on the Government's mean and stingy attitude to lone parents and the disabled (although I just have).

No, it's their approach to savers in general and those planning their retirement in particular which makes me wonder whether the word "promise" holds a different meaning for the People's Party than it does for the rest of us.

Barely a year or two ago, Labour was determined to convince us of its commitment to everyone's right to a decent retirement income.

I remember a long telephone conversation with John Denham MP, then Opposition spokesman on pensions. Mr Denham poured scorn on Conservative plans to privatise the state pension system. By contrast, he was positively rhapsodic about his party's support for occupational pension schemes as an integral part of its "stakeholder" reforms.

Yet, as a story on page 7 shows, barely a few months in office have led to a remarkable about-turn from Mr Denham. At least 500,000 hapless employees will face a cut in the Government's contribution towards their pension schemes.

In recent years, a growing proportion of occupational pensions have switched from "final-salary" to "money-purchase" schemes. Employers have found it cheaper not to guarantee their workers' pensions and prefer to make what are usually smaller contributions into money-purchase schemes.

Alongside this change, the Government is trying to persuade us to opt out of its state earnings-related pension scheme (Serps), which it claims not to be able to afford. Anyone in an employer's money-purchase pension scheme which opted out of Serps received a certain annual contribution to their pension, based on their income.

Except, as our story reveals, Mr Denham is slashing the amount paid out by almost one-third. Over a person's lifetime the amount to be cut is worth thousands of pounds. Yet Mr Denham's justification for the cut is even contradicted by figures from his own Government Actuary's Department.

The message from Labour seems to be that if you want to rob savers, don't go for smash and grab tactics, try a little sleight of hand instead. As for Mr Denham, maybe he is right to change his tune. Perhaps I could suggest a new one for him: Rhapsody in Blue.

We have been inundated by requests for The Independent's free Guide to Ethical Finances, written by me, which explains how to invest your money according to your conscience. You can obtain your copy of the guide, sponsored by Friends Provident, by calling 0800 21 44 87. Or fill in the coupon on page 8.