So we will have to wait another year to see the Government’s final proposals for a cap on pension charges.
This is a significant delay, as it signals a shift in the policymaking process on pension reforms.
There have been rumours this delay is a result of a turf war between HM Treasury and the Department for Work and Pensions. The Treasury has been sceptical of the need for a cap and has been pushing for the highest cap possible, while the DWP has favoured a more aggressive consumer-friendly cap.
This is a sign Coalition politics are even beginning to bleed into technical areas such as pension reform. Up to now pensions minister Steve Webb has been largely left alone to progress his vision for reforming the marketplace. The fact the Treasury has now stepped in is significant and suggests the Conservatives are taking a greater interest in this area and challenging Webb’s ownership of pension policy.
This was perhaps inevitable as, with much of the Coalition’s legislative agenda now complete, both parties are increasingly focusing on the 2015 election and their manifestos. This has resulted in an added frisson to the usual Coalition bickering as ministers seek to draw dividing lines and claim ownership of policy areas.
This is particularly relevant as we consider what the 2015 manifestos will contain in terms of pension policy. By and large there has been a consensus within Westminster on the direction of travel in reforming workplace pensions. But as each party seeks to differentiate themselves and set out their vision for the future UK pension marketplace it is likely the minimal differences we have seen over the past years will start to widen significantly.
That is not to say any of the parties will radically alter their positions. Industry figures should expect to be presented with a unified front on the need for further action to increase transparency and consumer trust in pension products. But we are likely to see the Conservatives begin to step back from interventionist measures and to reconsider any measures which may negatively impact on SMEs and economic growth. This could become a key issue later on in the automatic enrolment process if we see significant numbers of SMEs complaining about compliance costs or beginning to shed staff.
The more interesting and unpredictable aspect will be how the Liberal Democrats and Labour differentiate themselves, as both seek to woo the consumer vote. Shadow pensions minister Gregg McClymont has already criticised the Government for caving in to ‘vested interests’ in delaying the charge cap. Labour will continue to press this narrative and seek to convince voters that neither the Conservatives nor Liberal Democrats are able to enact real reforms to the marketplace to get them transparent, fair products.
This in turn will put pressure on Steve Webb and the Liberal Democrats to begin to take a more hardline stance and emphasise their ownership of the pension reform agenda. With the ongoing implementation of auto-enrolment, the ambitious defined ambition proposals and an expected white paper on pension charges and scheme governance, this will be an action-packed agenda for the coming year. If the turf war between the Treasury and DWP continues then I think we can look forward to an interesting 2014.
Iain Anderson is director and chief coporate counsel at Cicero Group