New pensions minister Ros Altmann’s inbox must be overflowing with the good-natured suggestions, wants, wishes and demands of the various parties over whose industry she now presides.
Her appointment has been welcomed by many who see her previous knowledge and campaigning, largely in respect of the elderly and the consumer, as a good grounding for her new role. However, others point to this experience as being too narrow and without the detailed knowledge of the political landscape and pension provider industry. Few, if any, can doubt, though, that she comes to office in interesting times as several projects of her predecessor Steve Webb are underway.
Altmann herself has gone on record as identifying her aims to “protect the pensioners of today and tomorrow “ and “to take forward work to bring in the new state pension, help millions more to be enrolled into good quality workplace pension schemes and safeguard new freedom and choice as to how people access their savings”. It is a very wide remit and Iam sure she will be very busy.
But let us get one thing clear: there is no hurry here. There is no need to impress with swift and image raising changes that may at first glance achieve short-term emotive gains but in the long run create more headaches and additional costs, only adding to the near constant stream of changes, which themselves have turned the public off to what is the most essential form of lifetime saving that can exist.
The Conservatives and Altmann should have the whole of the five-year tenure. I cannot imagine a cabinet reshuffle seeing her skills better employed in another area of government. A similar term was afforded to Steve Webb (although perhaps at outset he did not know it and while many of the proposals he brought to the table and indeed to fruition were well constructed and consulted upon, some, particularly towards the latter period of office, were not). Thought bubbles that somehow became public statements and were rushed into consultations may or may not become policy: the second hand annuity market being a case in point. Steve Webb has revealed that the Office for Budget Responsibility has already factored in the tax revenue it will reap from letting people sell their annuity in a second-hand market. “The creation of a second-hand annuity market is therefore very likely,” he revealed at a Workplace Pensions Live event in Birmingham. If this is true, for such a statement to be made before the consultation period has even closed, one wonders for whose benefit the proposals were made as expert industry opinion is that second hand annuity sales will very rarely be in the interest of the seller.
The pension freedoms and reduction in tax on funds remaining on death are another example of policy we would hope will be of benefit to the saving public, as well as restoring faith in the industry’s name. But the hurried implementation ahead of the tax year immediately preceding an election could have been handled so much better.
This five-year period is an opportunity to reshape the country’s pensions’ strategy for the long-term future, not for a short-term black hole plugging of treasury coffers. It could cover financial education for the public, not just for those nearing retirement but downwards through to the national curriculum, so new people entering the workplace are informed. More education might also see the possibility of reduced regulation, which itself would reduce consumer cost.
So can we as an industry, rather than promoting our lists of suggestions, wishes, wants and demands, simply ask for openness and clarity, for the proper consideration of implications of change to be assessed and for sensible periods of consultation to be provided. And finally for the outcomes of those consultations, taking into account the expert opinion of those parties replying to, again, be fully assessed before changes are enacted. Only with any changes explained to the public, and educational bodies fully staffed and trained ahead of time, will the public re-engage with pensions and confidence be restored into what, for all, should be their single largest savings plan.
Martin Tilley is director of technical services at Dentons Pension Management