Did Margaret Thatcher kill defined benefit pensions?
Alan Pickering says Iron Lady’s championing of the individual led to rise of defined contribution
Margaret Thatcher’s death this week sparked unprecedented media coverage and intense scrutiny of her eleven years in Number 10.
Five days of comment and analysis has made clear the Iron Lady’s enduring legacy is one of division – left against right, individualism against collectivism.
Alan Pickering, chairman of BESTrustees, cut his teeth in the trade union movement of the 1970s. He is unequivocal about Thatcher’s impact on British society and pensions in particular.
“Whilst Mrs. Thatcher was a very impressive individual I fundamentally disagreed with her libertarian philosophy. She was anti-big government, anti-big business, anti-collective institutions, whether those collective institutions were employer organisations, trade unions or pensions schemes.
“I think when it comes to many aspects of society, and pension schemes in particular, collective is better than individualism.
That libertarian drive for individuality has done a great deal of damage to the fabric of British society in general and workplace pension provision in particular
“It’s much easier to plan a pension at the level of a company or the industry than it is for each individual to be turned into a do-it-yourself pension consultant and that libertarian drive for individuality has done a great deal of damage to the fabric of British society in general and workplace pension provision in particular.”
Thatcher’s government launched personal pensions in 1988 and scrapped compulsory membership of occupational pension schemes.
The question of what people get to live on in retirement is increasingly dependent on the decisions why they take for themselves
Tom McPhail, head of pension research at Hargreaves Lansdown, said “pension provision may be focused through the workforce but with the end of final salary pensions and the move to money purchase arrangements, the question of what people get to live on in retirement is increasingly dependent on the decisions why they take for themselves”.