Before the Labour government took power, company pension funds were given a tax break to allow a build up of capital that could be paid out to employees when they retire.

Labour scrapped this tax relief resulting in a reduction of collected pension funds by £5 billion a year.  At the time, the rising stock market compensated for this.

However, today, due to changing economical conditions, we have lost around £100 billion over the last 12 years. 

Why is this idea important?

 

Many companies have spiralling pension deficits. British Airways recently reported a deficit of  £3.7 billion, more than its asset value. A re-instatement of the tax relief would give companies a chance to rebuild their pension funds – at least until the market picks up again.

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