by Ross Clark - Wednesday, 5th September 2007 -

It was Orwell’s nightmare futuristic society in 1984 which introduced the art of “doublespeak”: a language in which words are used to mean the exact opposite of their dictionary definition.

It has been left to the present government, on the other hand, to perfect it.

Read the output from the Department of Work and Pensions and Her Majesty’s Revenue and Customs (HMRC) and you keep coming across the term “pensions simplification”.

I was hoping that all would be explained in the 163 pages of notes issued to businesses who attended a seminar on the changes, which came into force on April 6.

But apparently not. The notes merely explain how to register your company’s pension scheme with HMRC.

If you want to know a little more, you can read all about it by visiting the HMRC website and clicking on “Pensions Simplification” – whereupon you will find a list of 39 new sets of regulations plus eight provision orders.

Fancy delving into the Registered Pension Schemes (Audited Accounts) (Specified persons) Regulations 2005, or the Pension Schemes (Prescribed interest rates for authorised employer loans) Regulations 2005?

No, I didn’t either. After all, there are more important things to be getting on with, such as running your business.

But it doesn’t take long to realise that there is little contained within the new regulations to benefit small businesses: only lots of extra work for state bureaucrats.

And things are certain to get even more complicated and more expensive.

At present, small businesses are not under any obligation to contribute to a pension scheme at all – only to offer their employees access to a stakeholder pension scheme.

But under proposals put forward by Lord Turner’s Pension Commission, employers may soon be obliged by law to administer a new National Pensions Savings System and to pay contributions equivalent to three per cent of employees’ salaries.

This is, in effect, an extra three per cent tax on business, never mind the extra layer of bureaucracy.

Why the need for a whole new pensions savings system when the whole idea of stakeholder pensions was that they were supposed to offer a means of saving to low-paid employees?

It turns out that stakeholder pensions have been an abysmal failure. Not only has take-up been low, but even when taken up, employees have failed to pay significant sums into their pension funds.

Of the 360,000 funds administered by B&CE Benefit Schemes, 170,000 have no contributions going into them at all, while a further 160,000 are only receiving a minimum £2.50 a week from the employer.

In other words, employees themselves are only contributing to 40,000 of the pension funds.

How does the government react to the obvious failure of employees to save for their future? By hitting business instead.

But why should businesses be expected to fulfil the role of feudal masters, looking after their former employees in old age like retainers up at the manor house?

Surely we should be encouraging selfreliance, not forcing businesses to become part of the welfare state, doling out benefits to people who once worked for them 30 years earlier.

The government has piled extra regulations on company pension schemes in recent years on the pretext that it believes schemes are underfunded and poorly administered.

True, many schemes are under-funded, but that is in large part because of Gordon Brown’s decision in 1997 to remove dividend tax relief on pension funds, and to force them to sell equities and invest in bonds at a time the stock market had been doing rather well.

But then state bureaucrats aren’t exactly proving themselves to be much more adept at managing pension funds, either. The parliamentary pension scheme now has a deficit of £49.5m.

Not that this will prove any problem for MPs as they contemplate a well-heeled retirement – courtesy of the taxpayer.

Oh, and of course, they’ll be donning slippers at 60 – while the rest of us have been told to wait until 68 to collect our measly state pensions.