| LONDON, March 20
LONDON, March 20 British finance minister George
Osborne's surprise revamp of the pensions system could help
galvanize his Conservative party ahead of next year's elections
by targeting the key voting group of older Britons.
The man in charge of Britain's $2.5 trillion economy is keen
to provide some relief for voters after four years of
belt-tightening, even while he continues to stress that he has
no money for extra spending.
The Conservatives are struggling to make up the roughly five
percentage-point lead of the opposition Labour party in opinion
polls, despite a stronger-than-expected recovery of the economy
over the past 12 months.
In the annual budget announced on Wednesday, Osborne stunned
the pensions industry by giving savers the freedom to spend
their pension pots as they choose, scrapping a requirement that
they buy safe annuities on retirement.
By so doing he has opted for a reform that appeals to older
voters who tend to show up for elections more consistently than
younger people without having to relax his grip on spending.
Older voters have also traditionally been more inclined to
support the Conservative party. But a poll this week by polling
firm Yougov found 17 percent of people aged over 60 who intend
to take part in the elections would vote for the
anti-establishment UK Independence Party. That's more than
double the percentage for people under 40.
Riding high on discontent towards the main parties, UKIP has
been taking support principally from the Conservatives.
"The Conservative Party still retains a lead among the over
60s so they are very much playing to their base with these
pension and savings ideas," said Laurence Janta-Lipinski, a
research manager at Yougov.
People over 60 represent about 30 percent of the adult
population in Britain.
Osborne made other changes designed to help savers,
including the introduction of a new, higher-rate "pensioners
bond" and more generous limits for tax-free savings accounts.
He is betting that a second year of strong economic growth
and faster gains in wages will help boost the Conservatives'
standing in the polls.
But even if Britain's economy outpaces the official forecast
for growth of 2.7 percent this year, Osborne's room for
manoeuvre in the winter, when he has the chance to announce more
measures in his half-yearly budget update, is likely to be
Britain's economy could soon be running out of spare
capacity, and applying further stimulus in the form of tax cuts
or extra spending could push it towards overheating.
"I think it's pretty unlikely," said Paul Johnson, director
of the Institute for Fiscal Studies, a thinkthank, on the
prospect of a pre-election giveaway. "They would have to
completely change their view about the output gap."
The pensions changes might be the sugar the Conservatives
need to help get support from the broader electorate for their
more bitter message that further tough times lie ahead.
"If you're behind in the polls, a shock which everyone pays
attention to can make people listen to the other things you
say," said Paul Whiteley, a politics professor at Essex
University who specializes in elections.
(Additional reporting by Ana Nicolaci da Costa; Editing by