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Can Turner pass the test?

When I used to write a column similar to this one for another newspaper, the editor would fret if I returned to the same subject twice in a row.<

This, he felt, was a sign that I was starting to become worryingly fixated with a particular topic. If I wrote about it three times on the trot, it was time to send in the men in white coats.

However, I feel myself being coaxed into coming back to the same topic, the Turner Commission report, at least twice and, depending on what it says, maybe even three times. By the time you read this column, the report will have been published and we will know exactly what is being proposed, instead of selective leaks.

Just as an aside, it is not beyond the realms of doubt that the leaks we have witnessed in the past fortnight, first, of the main proposals within the report, probably by elements close to or within Number 10; second, of the Chancellor of the Exchequer’s take on it, are part of a battle to assert each side’s respective dominance in a far wider political war.

In any event, shortly before its appearance, we were told by this month’s current Pensions Secretary, John Hutton – the 77th in the past eight years, or is he the 92nd? – that the report will be treated seriously. He has promised a “grown-up debate”.

According to Mr Hutton, any proposed reforms must meet five key criteria – promotion of personal responsibility, fairness, affordability, simplicity and sustainability.

What he missed out is the sixth and most decisive factor by which this report will be judged by – does Gordon like it?

Now, I know that for many IFAs, the one issue likely to dominate all others is the potential for a Britsave account to divert some of the money away into a Government-backed savings scheme.

As it happens, this is both unlikely and relatively unimportant.

First, the kind of people most likely to put their money in a Britsave account are not natural IFA clients.

Second, far more important than the fate of a few IFAs unable to demonstrate their value to their clients other than by selling them a more expensive product than Britsave is what Gordon Brown makes of its proposals. The omens are not good.

Let us look at one of its key elements – retiring two years later, at 67. I hate the idea of grafting until I’m 67. I know other people cannot imagine a world without work but I can think of plenty of things that I would rather do.

Nor am I alone. An opinion poll in the Guardian last week found that the idea of working longer for a higher state pension is backed by only 36 per cent of those questioned. Most – 59 per cent – say they want to stick to the present age limit of 65 even if it means receiving a lower state pension.

Which is why I am doubtful about this critical plank of the Turner Commission’s proposals.

That said, some of us might, just, be able to accept the idea of holding on two more years for a basic pension if it were pitched high enough to offset the wait. After all, the key problem for most pensioners is that their retirement income is pitifully small and they face living on the edge of poverty, something which most of those polled probably do not really understand. So a trade-off might make some sense. It would have to be pretty significant, mind.

But if, as was being reported last week, Gordon Brown is prepared to ditch proposals on index-linking pensions to incomes, then we are back where we started. All the more so if we retain most of the means-testing mechanisms that have ensured that large swathes of the population find it makes no sense to save any money for their retirement because the current tax and benefits system means that they will be barely any better off than someone who has not bothered saving any money at all.

Mr Brown seems to think that the problem with raising pensions and linking them to salaries and not inflation is unaffordable. In fact, that is not necessarily the case: just think of all the billions of pounds that have been or will be spent on other vital areas of Government policy – like the 5bn-plus on the continuing war in Iraq or the estimated 10bn-plus on ID cards that will be unable to prevent any determined terrorist from wreaking havoc on innocent civilians if he so chooses. The issue is not that of affordability but of priorities.

Yet Gordon Brown, who both wields the purse strings and has, or will have, the political power to determine the way the debate goes, appears to have made up his mind already.

If the leaks are correct, prepare for the Turner Commission report to be received with lots of praise for the enormously hard work that he and his staff have put into it – but with no commitment to put its central findings into practice or to give them bite.

Quite where that leaves ministers, who have spent most of the past three years telling us that the answers to all our questions on pensions reform would be contained within the Turner Commission report, is another matter.


Manoir maketh the woman

Gloucester mortgage adviser Della Price of Mortgage Advisory will be enjoying some fine dining, courtesy of Standard Life. Price won the insurer’s online protection competition by correctly answering three questions about the system and was the name drawn from more than 2,000 entries. The prize is a dinner and a night’s accommodation at La Manoir […]

NAPF says benefits reduced for millions

The NAPF says Turner’s proposals are timid and will lead to a reduction in pension benefits for millions. It says the two-tier system will delay simplif-ication for up to 25 years.

Post mortem

It’s time to kill off all the unsolicited mail pouring through our letterboxes


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