government agenda politics

Between 2010 and 2015 changes to the pensions Climbing up or system were high on the political agenda, but since sliding down? 2016, with the status how might pensions become a more workers may be collectively missing of Pensions Minister important political topic again? out on £78 million – “a major social downgraded and more It seems almost certain that there injustice”, says Altmann. will be a pensions bill during 2019. The government may also be forced radical reform seemingly Based on announcements made by the into further action as a consequence of delayed indefinitely, it Department for Work and Pensions the ongoing campaign – known as Waspi (DWP), we can be fairly sure the bill (Women Against State Pension Inequal- seems to have slipped down would include further changes to auto- ity) – to compensate women born in the the agenda. David Adams enrolment based on recommendations in 1950s for changes to the state pension. the 2017 review of the policy, measures In late November 2018 the BackTo60 asks how and why that to assist establishment of the pensions campaign was granted a judicial review might change in future dashboard and the Single Financial into the way the government managed Guidance Body (SFGB) to support raising the state pension age in 2010. The implementation of collective DC (CDC) group’s aim is for all women born in the riting a politics-related pensions; to boost the powers of The 1950s to be given the same amount of article that will be Pensions Regulator, and to encourage state pension they would have received published several weeks scheme consolidation. had their pensions been payable from into the future feels the time they turned 60. The government Wrather foolhardy at the moment. But Political causes claims this would cost more than £70 while we have no idea what the next There are other changes that many in billion, so there is certainly potential for a few weeks and months hold in relation the industry would like to see; former huge political row if the campaigners win to , we do know much of the Pensions Minister Baroness Ros Altmann the legal argument. government’s plan for pensions policy; picks out the need to solve the net pay Policies related to auto-enrolment and we can make educated guesses about problem that affects low earners enrolled may make pensions a more prominent what other pensions-related policies in pension schemes that use a net pay political issue, because they will affect might be implemented during 2019. arrangement (thought to include a so many workers and employers. Pensions has been a high-profile majority of occupational schemes), The December 2017 review of auto- policy issue in recent years, with meaning low earners miss out on tax enrolment recommended lowering the major reforms to the state pension, the relief. Research from Now Pensions has age at which employees can be auto- introduction of auto-enrolment, and suggested that more than 1.2 million enrolled from 22 to 18 and calculating ’s freedom and choice pension contributions based on an reforms. But since 2015, despite some employee’s full income, rather than from high-profile problems related to large- a lower earnings limit. The government scale schemes, the subject seems to have has said it plans to implement both slipped down the political agenda. In recommendations, but not until the 2016 the role of Pensions Minister was mid-2020s. effectively downgraded; the Pensions B&CE director of policy and external Minister is now only a parliamentary affairs (and former shadow Pensions under-secretary. The Treasury maintains Minister) Gregg McClymont describes a keen interest, mindful of the potential government policy on auto-enrolment in value to society of the investment capital 2019 and beyond as “the big unknown”, held in pension savings, of the potential because it is currently so uncertain which savings that could be realised if the changes it will implement and when. pensions tax relief rules were changed, In December 2018 the government and of the costs of funding the state announced it would also publish pension and social care. But when and proposals for “targeted interventions and

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partnerships” to boost pension saving among the self employed during 2019. Summary • Aft er a series of major reforms in recent years, pensions has fallen down the A need for guidance policy priority list in government. Another issue likely to be seen as in- • Th ere will probably be a pensions bill in 2019, including measures related to a creasingly urgent in future is the need to range of subjects, but further radical reform is very unlikely unless a government improve access to and uptake of fi nancial has a strong parliamentary majority. guidance and advice for people exercis- • A range of policy areas, including further development of auto-enrolment, access ing their right under freedom and choice to and effi cacy of fi nancial advice or guidance and challenges to state pension to access their pension savings. Pensions changes all have the potential to push pensions back into the public eye. Policy Institute head of policy research • In the long term, pensions will surely be an important policy area, as government Daniela Silcock notes that the concerns seeks to fund the state pension and cope with social needs created by an ageing the Financial Conduct Authority (FCA) society. has expressed about people switching to drawdown products without taking Another policy area that may receive Hargreaves Lansdown head of retirement fi nancial advice. “Many have been put- more attention in future is the triple lock policy Tom McPhail highlights a ting that money into all cash-invested that guarantees increases to the state suggestion made by Home Secretary drawdown pots – you might as well put it pension and means that over time it will in autumn 2018 that in the in a bank account and pay less,” she says. probably increase more quickly than event of a no-deal Brexit it might prove Th ere also continue to be concerns about earnings. But most observers believe necessary to scrap auto-enrolment to the threat posed by fraudsters to people neither of these areas will be addressed protect the economy. “We might see accessing their pension pots. directly, or in any kind of radical way, pensions pushed further down the One important change that is already during the next year. political agenda,” McPhail warns. underway but may get more attention in “You need a government with a On the other hand, he continues, the 2019 is the creation of the SFGB, which big majority to carry out radical policy election of a Labour government might merges the capabilities of the Money changes, because you create too many alter the tone of pensions policy. Advice Service, Th e Pensions Advisory losers,” former Pensions Minister and “I think if we saw a Labour Service and Pension Wise. Evaluations of Royal London director of policy and government come in, we’d see a shift the effi cacy of Pension Wise have been external communications, , away from individual responsibility back very positive about that service: 92 per says. Th ere seems little prospect of to paternalism, with more emphasis put cent of users were satisfi ed in 2017/2018, any political party winning a strong on the trustee boards and governance including 69 per cent who were very parliamentary majority at present. bodies to take responsibility for looking satisfi ed, while only 3 per cent were Webb believes that the downgrading aft er scheme members.” dissatisfi ed. But, as Barnett Waddingham of the Pensions Minister shows that, at Whoever is in government, the senior consultant Malcolm McLean present, “pensions aren’t even a policy consensus view seems to be that pensions notes, only small numbers of people are priority within the DWP, let alone the will remain low on the political agenda using the service. “More people have got government”. for the foreseeable future. But it will be a to use it if it’s going to succeed,” he says. big issue again at some stage, McClymont Th ere are some other major policy Doublespeak insists. “Whatever happens in the next issues related to pensions that we McLean believes there is another couple of years, the long-term reality of are unlikely to see addressed by the fundamental problem that hampers an ageing population structure is going government in 2019, but which have the the development and successful to force pensions into the forefront of potential to push pensions back up the implementation of policies relating to policymakers’ minds,” he explains. “And political agenda. Tax relief for pensions the pensions system. “Th e government one of the great things about auto- costs about £38 billion currently, about speaks with two voices on pensions,” he enrolment is that you’re giving lots more 40 per cent of which is given to the top 10 says. “Th e DWP is there to encourage people a stake in the pensions system. As per cent highest earners in the country. people to save more privately, but you the assets in that system grow there will Moving to a fl at rate system could save sometimes get the impression that the be more and more attention paid to it. the Treasury around £10 billion per year. Treasury is trying to stop people doing “In the long term, pensions will be an Both the current Chancellor and his that, when it’s clawing back on the annual important political issue.” predecessor have considered reforming allowance and so on. We don’t have Written by David Adams, a freelance tax relief, but neither has found enough joined-up government.” journalist political strength to do so. But things could get also worse.

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