Manifesto > Ownership: Delivering freedom of choice in public services (Introduction) | Lifetime Share Accounts | Welfare Reform | Pensions and Older People | Health and Well-being | Schools: Preparing Children for Life | Further and Higher Education

Ownership: Delivering freedom of choice in public services

Lifetime Share Accounts

The welfare state started with great intentions but over time has become both expensive and ineffective.  We need a transformation of the welfare state in order that people can be encouraged to work, save and build up their own assets; in short, to break the model of dependency which now characterises welfare.  To do this, we suggest a practical but radical alternative: the Lifetime Share Account (LSA).

Our proposal is that every individual in Britain be given a Lifetime Share Account to fund their pension, health and welfare needs. In short, a Lifetime Share Account is free from government interference, safe from government raids and combines a private pension fund, health and welfare insurance with the ability to make long term tax efficient savings.

For those in work, a proportion of their National Insurance contributions would go directly into their Lifetime Share Account. This would start at 2% of salary and build up over time as the system matures. In addition, every individual would receive an annual allocation of 'National Shares' - long-term bonds with a fixed date of maturity. Prior to the shares reaching full maturity, they will be able to trade a proportion for cash or other stocks and shares held in their LSA. However, better value would be obtained by holding onto the shares. National Shares will be valued annually, based on GDP, thus relating the assets held by individuals to the overall economic performance of the country.

Upon reaching the age of 18, each individual would receive an additional one-off amount of National Shares – a ‘coming of age bonus’. This would assist young people going on to higher education, give them a sound basis to start building their pension fund or to put down a deposit on their first property.

In this way, a large proportion of current government commitments in health and welfare would be replaced by share accounts giving individuals ownership and control of their own health and welfare needs.

Advantages of Lifetime Share Accounts

The advantages of Lifetime Share Accounts would be numerous. They would be owned by the individual and secure from government depredation. LSAs would combine universal coverage with individual incentive, and their tax-efficient status would stimulate savings and investment.

Private sector financial institutions would manage LSAs, properly regulated to ensure complete coverage and fair treatment for all. LSAs would be simple and transparent, with online access and brief, easy to understand guidelines. This measure will enable everyone to have a financial interest in the future of the country, allow them to build up long term assets and provide for their future pension needs.

There would be other advantages too. Welfare bureaucracy would be dramatically reduced and the pension time-bomb could be tackled. Individuals would have a healthy incentive to save and they would be able to see the value of their fund increase. They would have a tax-free option to invest and know that their personal trust was indeed their property. We would also introduce financial training in the classroom (see Schools) to better equip the next generation to avoid the pitfalls which have trapped previous generations (see proposals on debt).

Employers would thus be able to augment staff pensions without having to set up complex pension funds. This would provide a major boost to small employers and start-up companies many of whom are now afraid to take on staff solely because of the pension issue.

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