Simplifying pensions is turning into something of a nightmare. I suppose it was bound to, really, what with a proliferation of reviews all taking place at the same time and all aimed at “fixing” different bits of the problem – a bit like three or four different people working on the same Rubik's cube at the same time. It is a recipe for disaster unless everyone is working to the same master plan and everything is very, very joined up.
Let us hope it is all as well orchestrated as we are told and that it becomes self-evidently so very soon. Or perhaps the master plan that all the reviews are working to could be published first so we can be reassured that it is not all being made up by people as they are going along. Then we can stop worrying about it.
But what if we end up with a pension system left in even more of a mess than we had before this particular attempt at simplification started?
That's the point, really. Our pension system is as complex as it is because it has suffered from numerous attempts by Government guys over the years to try and simplify it and, to be honest, they haven't done a very good job of it. If pensions weren't such an important issue to all of us in this country, with hardly any state basic pension provision to fall back on, it would all be a bit of a laugh. But they are and it isn't.
The British people have been good enough to amass more voluntary pension savings than the rest of continental Europe put together. They deserve a simple and fair pension system from their Government that meets the very real needs of today's and tomorrow's pensioners and is not based on the prescriptive nanny-state stuff that we have been daft enough to put up with up to now.
That is where I agree with Alan Pickering's report.
Pensions need to be able to meet the needs of those who save in them. A good example of how this can be done is the pension scheme MPs have constructed for themselves. MPs have the very real problem that their average tenure in the House has reduced over the years, so it is very difficult for them to build-up sufficient pension entitlements to fairly reward them for all the effort they put in to the jobs they do for us.
The scheme they have at present is a 50ths final-salary scheme – much more generous than the 60ths schemes the lucky minority have in the real world but it has to be relatively generous because of the nature of their careers.
However, 50ths do not quite do the trick so they have improved it so that their pensions will now accrue on a 40ths basis – massively generous compared with normal people, but, to be fair, they do not have the job security the rest of us enjoy and, hey, their employer has got bottomless pockets, anyway, so what's the diff?
Given that it would be very difficult in the circumstances for politicians to argue that they do not know a good pension scheme when they see one, we should be able to rest assured that they will eventually come up with a corker of a scheme for the rest of us. Or, at the very least, a simple and fair environment that will not act against us as we attempt to dig ourselves out of the hole they will not find themselves in. Anything else would be a bit off, really.
The needs of the British people are as straightforward and easy to understand as are the particular needs of MPs. We need better pensions, not worse ones. We need more chance of our employers providing schemes for us. We need more chance of those schemes being made better and better and we certainly do not want the schemes that have thrived for over four decades suddenly evaporating just when we really need them or the benefits they provide being dumbed-down in the name of simplification.
That is where I disagree with Alan Pickering's report.
Steve Bee is head of pensions strategy at Scottish Life