By cutting the link between contributions and benefits, Mr Brown has removed the rationale for a separate national insurance system.

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Union leaders have said there are still major divisions between them and the government over three key proposals - to raise the pension age, to increase workers' contributions and to link pension values to the generally lower consumer prices index (CPI) rather than the retail prices index (RPI).

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Both Clinton and Schwartz have denied any link between the waiver and the campaign contributions.

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