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Webb earned his knighthood but pensions policy battle is far from over

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Hargreaves Lansdown head of retirement policy Tom McPhail

Former pensions minister Steve Webb received a knighthood in the New Year’s Honours, as did Andy Murray and Ken Dodd. Only one of the three was for services to pensions.

As Steve’s successor found to her cost, being a good pensions minister doesn’t always have much to do with arriving in the job with a good knowledge of pensions. The current minister, Richard Harrington whose knowledge on pensions on day one was almost zero, already seems set to prove that being an effective minister is less about strong technical knowledge, and more about being able to learn and to work within the machine of government.

Though it obviously pains me to speak positively about someone who now works for a competitor organisation, Steve’s time as pensions minister was undoubtedly a success. He not only delivered on auto-enrolment, he also reviewed and modified the rules to make them more sympathetic to the needs of both employers and members.

The fact that auto-enrolment continues to be a success today is largely thanks to the five years Steve spent in the job. He also took on the huge challenge of reforming the state pension and managed to deliver a positive outcome. For this alone a knighthood seems modest reward for his efforts.

The Liberal Democrat triple lock policy has helped to substantially raise incomes for those in retirement now. Steve also recognised the importance of helping investors to get a better outcome from their defined contribution pensions; he not only supported greater take-up of the open market option, he also facilitated the launch of Osborne’s pension freedom announcement in 2014.

Despite these successes and glossing over the odd policy cul-de-sac such as pot-follows-member and defined ambition, it is striking how much still remains to be done. In spite of the fact that the UK’s retirement provisions have been in a state of almost constant reform for decades now, we are barely standing still, let alone making progress.

Pensions coverage and overall savings rates are far below where they need to be. The pension tax system is an incoherent mess. Intergenerational inequalities are getting worse rather than better and the disparity between the benefits enjoyed by defined benefit scheme members and those in money purchase arrangements should be causing more outrage than it does.

We have far more pension schemes than we need and it is far from clear that they are run and regulated as effectively as possible. For all Steve’s successes, Richard Harrington has a lot of work to do.

Tom McPhail is head of retirement policy at Hargreaves Lansdown

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Comments

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

  1. I cannot agree that Webb deserved a knighthood for doing his job. Surely what has been achieved must be compared against what was not achieved. The disgusting lack of informing older women of state pension age (WASPI) immediately comes to mind.
    But one other issue that Webb was in favour of, and spoke eloquently & passionately about, was the abolition of UK’s discriminative “frozen pension” policy.
    Even as late as 6 May 2013 on BBC World at One he said…..
    “It’s not about nationality or where you’re living. It’s about whether you’ve put into the system.”
    While he was in Opposition, his words demanding the scrapping of this policy would have put Shakespear to shame. Then came the Pension’s Minister job, and with it came the U-turns, misleads and excuses of how it was now suddenly essential that this discriminative & impoverishing policy now be kept.
    Entirely through his use of loaded questions, diversions, false reasoning and smoke & mirrors, the law that was needed to go into the New State Pension passed ‘scrutiny’ in Common’s Committee. Earlier he said he didn’t want to debate it because it involved valuable Common’s time. Not a word about the people it would impoverish. It was a Whitehall farce Brian Rix would have been proud of.
    The law he pushed through was Section 20 of 2014 Pension Act. Check it out. It joins a Regulation 5 which accomplished the same job for the old British State Pension.
    Both of these heinous laws can freeze the state pension of ANY recipient ANYWHERE on the planet for as long as they breathe, forcing them into poverty.
    And for this he gets a knighthood?
    Not in my book Tom. Not in my book!

    • Andy Robertson-Fox 13th January 2017 at 9:56 am

      Add to what you have said the abolition of the widowed spouse’s right to a pension based on the late partner’s NI contributions.
      Also, there is, from April 2020, the scrapping of the adult dependency increase (often referred to as the additional married persons allowance) with the consequential major pension cut for those in receipt of it at the time and one can see why even the electorate of Thornbury and Yate rejected him.
      At least Andy Murray and Ken Dodd brought a feel good factor and something to smile about through their success in their work and voluntary charity work.

  2. There is little one could add to the previous two comments and it shows just how corrupt the current system is and the good guys and gals get ignored with David Cameron’s latest list showing how much,it’s a wonder that he did not give himself one.

  3. Webb and Altmann both got their awards to keep them quiet about the pension changes to come, it is clear the government have a plan which they have shied away from before, which once implemented, will cause uproar, it stinks of a massive payoff to keep schtum.

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