With UK income taxes now as high as 60% for higher earners, Alistair Darling has twisted the knife further by increasing tax relief on pension contributions to the point where it almost seems pointless to have one.
New Zealand has a system which is the envy of the world. Decent tax benefits and flexibility for private pensions. But if your private annuity exceeds a minimum threshold, then your state pension (which like it's British equivalent is tiny) is taxed at 100%. This frees up money for those in need, resulting in a sustainable pension system.
Below is an article from the Daily Mail of 24th June.
Pensions crisis: 96% of final salary schemes are doomed... OAPs worst off in Britain... and state funds withering on the vine
By Olinka Koster
The extent of the pensions crisis was laid bare yesterday by a 'triple whammy' of worrying reports.
Almost all blue-chip companies now admit their final salary schemes are 'unsustainable', according to a major survey.
At the same time, two separate studies said that Britain's state pension was the worst in the Western world.
Pensions crisis
Concerns for the future: A 'triple whammy' of reports have laid bare the scale of the pensions crisis
The reports confirm that private sector workers face a bleak future, with the state handout withering on the vine and dozens of generous company schemes on the verge of being wound up.
However, most gold-plated public sector schemes - funded by the taxpayer - remain untouched.
Almost 90 per cent of state employees receive final salary pensions, compared with just 16 per cent in the private sector.
Opposition parties and campaign groups said last night that the three studies provided yet more evidence of the growing crisis in pension provision.
Liberal Democrat work and pensions spokesman Lord Oakeshott said: 'Gordon Brown has been in charge of our pensions for the past 12 years.
'He should be ashamed of these shocking statistics, showing Britain's miserable means-tested state pension right at the bottom of the world pension league.'
Prior to 1997, Britain's state pension pot was in relatively good health. But in one of his first acts as chancellor, Mr Brown scrapped the tax relief on dividends paid into pension funds, costing them around £100billion.
It triggered the shutdown of final salary schemes covering hundreds of thousands of workers.
Yesterday's 'triple whammy' of bad news comprised:
* A survey of 1,000 blue-chip companies by Pricewaterhouse Coopers, which found that 96 per cent believe their final salary schemes are unsustainable.
* A study by the influential Organisation for Economic Cooperation and Development (OECD), placing Britain at the bottom of a 'pensions' league table for those yet to retire.
* Research by the UK-based Office for National Statistics, which confirmed just how little the state pension is now worth.
The House of Lords also released a report yesterday criticising Chancellor Alistair Darling's Budget for removing a series of tax breaks on pension contributions.
Tory pensions spokesman Theresa May said: 'This is yet more bad news for cash-strapped pensioners who are the innocent victims of this recession.'
Some 16 per cent of the firms which responded to the PWC survey had already closed their final salary schemes to current members.
Lords anger
A further 55 companies said they intended to freeze their schemes for existing members within the next five years.
Meanwhile, the report from the OECD showed that younger British workers will get far less generous state payouts than their counterparts in France, Germany and Spain.
Those entering the labour market today can expect to receive a state pension worth just four times their average annual earnings of £31,500 over the course of their retirement.
In contrast, Germans will receive more than seven times their average salary, while the French will get more than nine times their annual pay.
The figures from the ONS, which measured how state pensions reflect previous salaries, revealed that Britain has the least generous arrangement of any OECD country. The basic state pension is just £95.25 per week for an individual and £152.30 for a couple.
Michelle Mitchell of Age Concern said: 'It's a national disgrace that more than two million UK pensioners are trapped in poverty.
'With British pensioners receiving one of the lowest state pensions in Europe, the Government must go further to improve the situation for the country's poorest older people.'
The latest round of dismal news comes as unemployment reached its highest level since the end of 1996 - just before Labour came to power.
Many workers are suffering from pay freezes, leaving little spare cash to save for their retirement.
Pensions minister Angela Eagle said last night: 'It's absolute nonsense to suggest this Government is not committed to pensioners.
'Measures such as pension credit and winter fuel payments mean that even the poorest pensioners in the UK are still better off than the poorest pensioners in other countries.'
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