Pensions remain the most important issue on the financial services policy agenda – and they continue to grow in importance day by day.
Over the past month, we have seen major names, including Maersk, British Airways, Prudential and Scottish Widows, abandoning their own defined-benefit schemes.
The significance of the moves made by the last two companies on this list will not be lost on readers.
We have witnessed amazing scenes outside factories across the UK with workers prepared to man the barr-icades to defend their defined-contribution pension rights – a phenomenon which would have seemed utterly implau-sible only 18 months ago.
There has already been a case of one company backtracking on its decision to shut down its final-salary scheme. Single-issue people power is now being applied to pensions.
The press headlines that the Government might be considering removing higher-rate tax relief on pensions met with the inevitable response.
Both Shadow Chancellor Michael Howard and LibDem Department for Work and Pensions spokesman Steve Webb have latched on to the issue with some gusto. In fact, Webb has turned his comments into a headline of his own: “Pensions overhaul must not be back door to tax raising” says the latest LibDem release on the issue.
He makes this key point: “If the Government decides to press ahead with this, it must not just be a back-door method of increasing revenue. Every penny saved from ending tax breaks should go into boosting pensions for people who do not have one.”
Of course, the Tories continue to make the wider point about Gordon Brown's moves on corporation tax in his 1997 Budget upon entering power – the so-called stealth tax.
Michael Howard's current theme is: “The pensions crisis we face has in part been dir-ectly caused by the Government. If Gordon Brown had not imposed his £5bn a year tax on pensions, pension funds would be far healthier than they are today.”
Eyes are now turning towards the Chancellor's Autumn statement and to the Pensions Green Paper sponsored by the Department for Work and Pensions.
There is worrying conjecture that the Green Paper may not be in evidence for some time. Shortly after the publication of the Pickering review in June, the Government announced the Green Paper would be published in the autumn. We are all well aware that, in Government parlance, “autumn” means any time before December 31 – a comment I overheard from a senior minister at a fringe meeting during this year's Labour conference. So autumn might turn into winter might turn into the New Year.
It appears the occupational pension sector is sending a deluge of evidence to the DWP as part of the Green Paper process and this seems to be considerably slowing the process.
Now there are rumblings from the opposition parties that they will make some political capital if the Green Paper is significantly delayed. However, one of the key things about the details of the Green Paper is the desire for some really new and bold thinking.
If this means we have to wait until the early part of 2003 for the Green Paper, then I do not think that will be a bad thing – both politically or in terms of the policy outcome.
As the Government so comprehensively slid the results of the Pickering review under the table, those of us who follow policy were concerned there might be a complete lack of follow-through on the issues.
However, the longer the Green Paper is delayed, the noises must be good that the Government is going to try and “join up” its approach and deliver fundamental change.
Pension simplification, raising the retirement age to 70, addressing the fundability of the state pension, means-testing and looking at whether the state second pension remains desirable should all hopefully be on the agenda.
For once, I would divert from my usual path of calling for immediate action. The likelihood of getting any legislation on the statute book before 2004 is highly remote. Policymaking is at a critical juncture in this respect.
We all remember how long it took for the Financial Services and Markets Act to pass into law. But most agree the effects of the legislation are starting to show themselves in terms of FSA action on consumer protection in particular.
Let us take a little longer over pensions. The old adage that fast legislation is poor legislation is, I think, very true.
Some people are already talking about pensions – or the lack of provision of them – becoming the poll tax for New Labour. While it is true that the state of the NHS, education and transport have dominated the agenda up until now, none of us would have predicted people would go on strike to defend their pensions at work.
The pension crisis is here. The hope must be that the Government takes the time to consult the industry and consumer – and everyone should take the time to respond to the DWP's Green Paper process. That way, it might, just might, get the solution right.
Iain Anderson is a director and chief corporate counsel at Cicero Consulting