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The Darling legacy

The Secretary of State for the 1 per cent World has moved to Transport. But is pension policy about to hit the buffers?

Alistair Darling has, according to the UK&#39s political correspondents, established his reputation as a safe pair of hands at the DWP. One wonders if this elite bunch of hacks bother to read their own newspapers which are warning of a pension crisis.

In a narrow political sense, Darling succeeded, avoiding the unseemly rows of Harriet Harman&#39s tenure but the results are mixed. On the occupational side, defined-benefit schemes have shut to new members and contributions cut. The DWP was slow to appreciate the FRS17 threat, a threat aggravated by the earlier phasing out of advance corporation tax credit, effectively a pension tax.

On the plus side, existing pensioners are better off as the minimum income guarantee lifts incomes although it could penalise savers. On retail, stakeholder brought needed clarity to contracts but the price cap left little room for distribution, hamstringing its launch while the original target of those earning £9,500 to £18,000 now reads like a bad joke.

The Pickering review indicates Darling realised to his credit that pension legislation and regulation urgently require simplification. But recent remarks that advice and products can be simplified further suggest that the mistakes of stakeholder might have been compounded.

This can be avoided if Darling&#39s successor, another safe pair of hands, Andrew Smith, learns that if the private sector is to be harnessed to help with pension provision, the Government has to work with the grain of the industry, including distribution, not against it.

In that vein, 1.5 per cent would be a 100 per cent improvement. But don&#39t bet on it.


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