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Nic Cicutti: Pensions shouldn’t be used to climb the greasy pole

Nic Cicutti

Has Labour gone AWOL from the financial services beat? That was the question asked by Money Marketing last week, following a reshuffle by the party that has seen four shadow pensions ministers appointed in less than a year.

The latest through Labour’s revolving door on pensions, unknown MP Angela Rayner, replaces the equally anonymous Nick Thomas-Symonds, who has been moved to another post barely three months after being appointed into the old one.

Actually, I should row back on the word “unknown” when referring to Rayner. The Sun, my favourite red top, recently published an intriguing story about the Ashton-under-Lyme MP involving shoes.

Angry that a shop she had previously frequented had sold its last pair of £195 Star Wars shoes with novelty four-inch R2D2 heels, Rayner sent them a sternly worded letter on House of Commons-headed paper warning that the shop’s failure would “cost them”. “I am writing to let you know that treating customers in that way will only cost you more in the long term,” Ms Rayner concluded, adding “MP” after her name – thus demonstrating a finely-honed understanding of her priorities.

No doubt Rayner, a former union branch secretary, would point out having a shoe fetish never did Theresa May any harm. And to be honest, I would rather have someone with a passion for something – anything – than a bloodless automaton spouting technical pensions jargon at me.

But at some stage Rayner will need to develop some grounding in the pensions arena if she wants to make an impression – and if she truly wants to take part in the growing debate over a vitally important aspect of public policy. In other words, this should not simply be a temporary staging post where one or two headlines earns you a few more inches up the greasy pole.

The omens are not good. Labour’s cavalier attitude to the pensions brief goes back a long way. I recall last year trying to work out how long the average Labour pensions minister lasted back when the party was actually in government.

It is worth noting that, like Rayner’s R2D2 shoes, having a specialist pensions minister is still a relative novelty. Prior to 1998 the role was allotted to ministers as part of a wider welfare portfolio. Thereafter, as one of Tony Blair’s supposedly eye-catching initiatives, pensions was given its own minister.

Unfortunately, John Denham was only the first sacrificial lamb, lasting barely five months. Angela Eagle did marginally better at 11 months. The average period in office was about a year, with 12 pensions ministers appointed between 1998 and 2010, one of them twice. Labour’s general approach to pensions in office was to use the post as a means of blooding young MPs, who either went on to greater things or sank without trace.

In opposition, it did marginally better. During his brief period as a Labour MP in the last parliament, Gregg McClymont fought a valiant battle to introduce an auto-enrolment charge cap, although he was overshadowed by the man in office, Steve Webb, who made the pensions minister’s job into something meaningful for the first time.

Nonetheless, McClymont managed to cling on as shadow minister for almost four years – not bad going in a party that had previously seen the post used as part of ongoing political sub-plots rather than as being important in its own right.

If I were Angela Rayner, one of my first jobs would be to call up Gregg McClymont, who is now head of retirement savings at Aberdeen Asset Management, and have a long chinwag with him.

Not only does McClymont know where the bodies are buried in terms of Labour policy but Aberdeen announced last July that McClymont’s new job would cover defined contribution pensions strategy, research and implementation, with a particular emphasis on “the new world of retirement savings”. I am sure he has a few ideas up his sleeve that could help a former comrade new in her job.

My second job would be to find out what happened to the Labour report into savings that was meant to be prepared by Professor David Blake at the Pensions Institute. Rachel Reeves, the shadow work and pensions secretary who appointed Blake to that “taskforce” in 2014, was a big fan of large pooled pension funds along the Canadian and Dutch model, and there may be some good ideas there worth reviving.

The third thing I would do is look forward to what the Tories plan to do in the next Budget – such as changing the tax incentives for saving into a pension – and come up with something far more radical and eye-catching.

For example, doing away with or dramatically reducing higher-rate tax relief on pension contributions while offering a pound-for-pound matching scheme that targets lower earning savers. Imagine the headlines: Double your money with Labour.

The beauty of Jeremy Corbyn’s chaotic party management structure is it might even allow some far-reaching populist ideas to be expressed without too much micro-management from the top. I would give my last pair of Star Trek high heels to see that.

Nic Cicutti can contacted at nic@inspiredmoney.co.uk

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. But hopeless Labour pensions ministers, whether in government or opposition, constitute a well worn path. I am so old I remember Harriet Harman in the post; and watching her being interviewed on the finer points of the industry one evening gave me the impression she barely knew what a pension was. It would seem this is not a post that is high in their priorities.

  2. Star Trek??

    https://i.imgur.com/iWKad22.jpg

    Anyway, the proposed soundbite is a non-starter, as in Corbyn’s enlightened post-capitalist society there will be no such thing as money to double. There will be no need for pensions, the law is “to each according to his need”, age doesn’t come into it.

  3. The irony of life. The author of this article whom I met at the Hearts and Middlesex something society 20 years ago, dis-liked the Pensions Industry Intensely, ( which at the time I pretty much agreed with everything said ) and now seems to care about it’s future. Do you remember what you said then was the solution !? Yes I remember haha

  4. Pensions policy emanates from No. 11 and especially during the Brown years was a relentless succession of damaging changes and complications that poisoned ever more people against saving into a pension plan. Endless change creates uncertainty, increases complexity and pushes up the costs of advice. All these things create distrust and damage confidence. They certainly don’t encourage ordinary people to lock away their money in a pension plan for many years and we seem to be moving into an era in which the minimum access age looks likely to be raised every few years. By the time most 30- and 40-somethings reach the age of 55, the minimum access age may well have been ratcheted up to 65.

    I don’t think the post of pensions minister carries any real weight at all. Steve Webb may have been more vocal and lasted longer than those who’d worn the badge before him, but my view of him is that he was much less a policy maker than a front man for changes decided by others. Would any intelligent person genuinely concerned about encouraging people to build a fund of sufficient size to provide a secure lifetime income post-retirement really have proposed to the Treasury the new pension freedoms? I don’t think so. Scrapping the trap of low annuity rates has created as many problems as it’s solved and Income DrawDown is no magic way of extracting a quart from a pint pot, as all too many people seem to assume. What the government should have done is create a special class of high yield gilts available only to annuity funds.

    And what, of any value, has Ros Altmann come up with? She seems to be a pleasant woman but most of what she’s proposed has just muddied the water still further. Yes, we have lower charges and no commission bias for new contracts but, apart from those improvements, is the pensions landscape any better and more attractive nowadays to those who need to be accumulating a retirement fund than it was 10 or 20 years ago?

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