Government policy destroying incentives to save

Feb 29 2004 by Brian Amble Print This Article

Fidelity, the UK’s largest investment company, has slammed the government’s approach towards savings and pensions.

In an interview with The Sunday Times, Richard Wastcoat, MD of Fidelity’s UK funds operation, laid bare the absurdity of a policy that is claimed to be designed to encourage saving but in reality has systematically dismantled almost all the tax incentives to do so.

“The government is publicly committed to encouraging people to save, yet it has done more to damage the savings culture in this country than promote it,” Wastcoat told The Times.

And Fidelity is not alone in its criticism.

Paul Feeney, head of retail at Gartmore, said the problem with the government’s approach was that it did not communicate with the industry. He said: “When initial consultation papers come down from on high they often contain unworkable proposals. It is difficult to see who, if anyone, they have been talking to in the industry before setting down their thoughts.

“The government seems to have decided that the way to close the pensions gap and savings gap is to force the industry to sell unprofitable products and take away all the tax incentives that actually do encourage people to save. We do not understand their objectives.”

Just how the government expects people to save for their retirement when the tax regime punishes them for doing so is something that is beyond us, too. Or maybe this is another example of Mr Blair's joined-up government in action.

Sunday Times | Fidelity supremo attacks Labour savings meddling