Promising start but big money tests still to come
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Eighteen months after coming to power, we thought it was a good time to take a look at what the coalition Government has so far achieved in the pensions arena. In this supplement, leading IFAs, providers, MPs, campaigners and unions give their verdict on the current administration’s avalanche of papers, proposals, rules and ideas. LibDem pensions minister Steve Webb and former Conservative leader and Work and Pensions Secretary Iain Duncan Smith have enjoyed an uninterrupted partnership at the Department for Work and Pensions, a breathe of fresh air compared with the constant chopping and changing we saw from the previous Labour government.
Webb, in particular, has gained the respect of many in the industry for his technical knowledge, willingness to engage and determination to push forward his own ideas into a very crowded legislative programme. It is noticeable that MPs from all sides of the house single him out for praise in this supplement.
As a long-serving LibDem pensions spokesman, Webb was criticised by some for peddling idealistic policies from the safety of eternal opposition. Of course, all that changed following the coalition agreement. When he was made pensions minister, few gave him a chance of getting his way on the need for a simple, higher state pension. To his credit, Webb has managed to drive forward his state pension proposals and, more generally, stuck to the principles he preached in opposition.
Writing in this supplement, Labour Shadow pensions minister Gregg McClymont describes Webb as a “widely liked and knowledgeable administrator” whose policies are being blunted by the Conservative- dominated Treasury. The future of the state pension reforms will be the ultimate test of this theory.
A higher, single state pension chimes with the brand of social conservatism Duncan Smith spent so much time formulating in opposition but some are questioning whether Chancellor George Osborne will be willing to sign off the bill.
Auto-enrolment sets up another possible departmental clash, with Treasury officials understood to be examining closely Adrian Beecroft’s recommendations to ease the burden for small firms. McClymont suggests the Government’s wording around the Pensions Bill leaves wriggle room to offer concessions.
The Government’s handling of the current dispute with unions over public sector reform will go a long way to shaping its pensions legacy. In this supplement, Hargreaves Lansdown’s Tom McPhail and Unison’s Dave Prentis set out both sides of the argument.
No one can accuse the Government of dragging its feet on pension reform, with the new annuitisation reforms already in place, radical changes to both the state pension and public sector planned and plenty of work taking place in areas such as the Omo and dealing with small pots.
The big test, of course, will be in the implementation of these grand plans, especially with a deficit-reducing Chancellor holding the purse strings.
Paul McMillan is the editor of Money Marketing- follow him on twitter here
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Readers' comments (3)
Julian Stevens | 18 Nov 2011 8:53 am
Reform of State Pensions is one thing and, admittedly, it's a big nettle to have grasped. However, despite the Conservatives' pre-election promises, it's a great shame that nothing appears to have been done as far as Pension Simplification is concerned, nor any measures to put right any of the damage done to the pensions framework and thus public confidence in it.
To the question: Is the general public any more inclined than it was before the coalition took office to start saving for retirement or to resume so doing, I think the conclusions of a MORI poll would almost certainly be a resounding NO.
Auto-enrolment into NEST is just a mechanism to force people into a system in which they have no confidence. In fact, it's forcing them to participate in a system towards which they feel unambiguous antipathy. Worst of all, most of the corrective measures so urgently needed could be implemented at little or no cost to the Exchequer, so what possible reason can there be for ignoring them? It just doesn't make sense.
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Anonymous | 18 Nov 2011 11:21 am
The country is in a terrible mess and the economy just about alive and the government chooses NOW to inflict, with all the right intentions, a massive financial burden to employers and employees. Is this the final nail in the UK's coffin? At the same time they decide to decimate the financial services industry with unnecesary legislation. How is the Government doing ? Not acting very sensibly......
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Anonymous | 18 Nov 2011 11:26 am
People are turning their back on pensions. Not because they don't want to save for their future, but because the offerings are hellishly complicated, expensive and have a very poor track record of delivering what is promised. So instead they turn to ISAs. Simple straightforward. NEST is even worse !!!! You opt in but you can opt out but you have to be opted in again but you can opt out again. Which moron thought this up ? Even the trade don't understand it ! God help the poor customers.
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