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Steve Webb becomes pensions minister- Hoban gets Treasury role

Former Liberal Democrat pensions spokesman Steve Webb has become pensions minister in the coalition Government.

Conservative MP Mark Hoban becomes Financial Secretary to the Treasury, a role he previously shadowed, while former Shadow Treasury minister Justine Greening becomes Economic Secretary to the Treasury.

Webb (pictured) returned to the work and pensions brief for the LibDems in January 2009 after impressing many in the industry when he previously held the post between 2001 and 2005. He contributed to the LibDems’ Orange book in support of economic liberalism in 2004.

Over the years Webb has constantly championed the idea of a citizens’ pension, offering a higher basic state pension around the level of the pensions credit to everyone meeting a residency criteria. The LibDems rolled back from a commitment to a citizens’ pension in their recent manifesto due to the current economic climate but it remains a long term goal.

In a recent Money Marketing article, Webb expressed general support for the idea of Nest although he warned the scheme would fail if concerns regarding means-testing were not addressed.

He said: “Real concern remains about the impact of mass means-testing of pensioners on incentives to save in Nest. The Government has tried to park this issue but it will not go away.

“The challenge of building confidence that it will pay to save in Nest is pervasive. It will have to be addressed before 2012 if the launch of personal accounts is not to be undermined by doubts – ill-informed or not – about whether it will be worthwhile saving.”

In recent interviews with Money Marketing and Corporate Adviser Steve Webb called for the scrapping of higher-rate pension tax relief, for the Open Market Option to be made the default option and advocated greater flexibility in allowing individuals to take money out of their pension early.

Mark Hoban was elected to Parliament in 2001 and took on the Shadow Treasury role in 2005 with responsibilites including the FSA and retail financial services, including IFA regulation.

He has been a keen follower of the progress of the retail distribution review and regularly attends Aifa events. However, Hoban has refused to offer much of an opinion on the RDR, except to welcome its general direction, suggesting it is a matter for the FSA and not for politicians.

Greening was elected to Parliament in 2005 and has previously worked on the work and pensions committee before her Shadow Treasury role and her role as Shadow minister for London.

Elsewhere, former Conservative MP Grant Shapps becomes housing minister, a position he previously shadowed.

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Martin Tilley 14th May 2010 at 8:56 am

    Taking away the higher rate relief will be extremely unpopular.

  2. Exasperated me 14th May 2010 at 9:04 am

    Mr Hoban should look at the Treasury files which show that the RDR is in fact a political policy handed down to the FSA.

    This is what government interference in regulation does, or did under Gordon Brown.

    Is he man enough to overturn the madness and overhaul the regulator?

  3. This is brilliant news. Steve Webb is one of the few MPs with a really good detailed knowledge of pensions and the complexities of our system.

  4. Hoban has refused to offer much of an opinion on the RDR claiming it is a matter for the FSA .
    Most IFAs voted Tory to get rid of the FSA

    If he is incapable of having an opinion then he should at least keep to the Tory promises of getting shot of this grubby quango

  5. ..but in the current economic climate there are more equitable uses for public money than tax breaks for higher rate tax payers.

  6. RDR – “It is a matter for the fsa and not politicians” Hoban has just proved he does not have a clue what the fsa are about. If you had any hopes that the fsa would need to exercise some control now that we have a new government, forget it. Things can only get worse.

  7. Taking away higher rate tax relief may well be unpopular with some but why should someone who is rich (and therefore less likely to be a burden on the state get a bigger incentive to provide for his/her retirement) than a basic rate taxpayer who, if they don’t provide properly/soon enough, WILL be dependent on the state?

    In fact, it could be argued that giving a basic rate taxpayer more than 20% relief is likely to produce better retirement outcomes, for more people.

    Steve Webb’s other proposals – for OMO’s to be the default option and for greater flexibility in getting money out early are also good ideas imho.

    I just hope he lasts longer than most of the Pensions Ministers we’ve had in the past 13 years.

  8. Julian Stevens 14th May 2010 at 11:53 am

    My first reaction is that Mr Webb cannot possibly be less effective than the series of utterly useless pensions ministers appointed by Blair & Brown. They all accomplished absolutely nothing, because Labour wanted nothing changed except to impose a series of damagingly negative restrictions and complications, for which Blair & Brown (both of them now enjoying lavish, index-linked public sector pensions) should hang their heads in shame.

    Making the OMO the default option at retirement is dead easy without incurring any costs for anyone, so no brownie points for that. But when is somebody (in government) going to start saying anything about what retirees will actually have available to them with their OMO instead of a retirement income product governed by GAD rates?

    The simple and transparent Pension Income Bond (wot I thought up) is all but ready and waiting in the wings. I would bet money that life companies would love to be able to present such a product to the market and get rid of all these complicated and un-comparable third way retirement income products.

    People turning their pension funds into tax assessable spendable income will also be good for helping to get the economy moving. It might also stop the rot of confidence in pensions that has steadily taken hold over 13 years of Labour economic maladministration.

    I wish Mr Webb all the best (and I’m glad he got the job instead of Hoban), but he has to take note of the changes that the industry is telling him need to be made.

  9. Pensions Manager 14th May 2010 at 1:00 pm

    Will you all please stop perpetuating the myth of tax relief on pension contributions. Apart from the anomaly that is the tax-free lump sum, the tax position is equalised, so it’s entirely fair and logical that there is no tax charge today, in view of the tax that is payable on the future pension income.

    What is proposed is not a removal of relief, but a double-tax charge – on the amount input as well as the amount paid out in the future. If this is considered fair and equitable, then go the whole way:- end the tax free lump sum; and end the tax free payouts on death.

  10. A welcome choice. With luck he will be able to make sure that there is, at long last, parity in state pensions when British pensioners retire abroad.

  11. “The rdr is a matter for the fsa and not politicians” Is mark hoban telling the fsa that they will enjoy as much freedom to decimate the ifa sector as they did under labour? We cannot have business as usual with this quango. It has been an expensive failure under a labour government and now it looks as though it will be allowed to continue on its course of destruction, with ministers like hoban saying its decisions are nothing to do with politicians.
    The tories are using the coalition to tear up their manifesto.Labour said at the weekend, that the reason they lost the election was that they stopped listening to the people. Tories take note! The electorate voted for change not politicians who are too scared or too greedy? to take on the regulators.

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