Friday, 15 December 2017

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    Minister of what?

    Pensions continue to sit in limbo as Guy Opperman is appointed new parliamentary under-secretary of state for pensions and financial inclusion

    First there was a pensions minister (Sir Steve Webb). Then, a minister of state for pensions (Ros Altmann, appointed Baroness in the process). Next, a parliamentary under-secretary of state for pensions (Richard Harrington).

    Winning the prize for the longest pensions-related ministerial job title so far is the new parliamentary under-secretary of state for pensions and financial inclusion, Guy Opperman MP. It’s not exactly Twitter-friendly.

    houses of parliament

    Some argue that Opperman’s new title is is not pensions-friendly either. “Pensions satisfy a unique requirement,” argues Kevin LeGrand, president of the Pensions Management Institute. “That uniqueness must not be overlooked or traded away in favour of a simplified generic savings approach.” LeGrand wants pensions to be “ringfenced from any further such movement in the future”.

    Like his new boss, David Gauke, Opperman has a background in the Treasury. Whether that will make pensions more or less likely to retain its uniqueness remains to be seen.

    Pensions satisfy a unique requirement

    There is an argument that pensions are being put at risk through individuals’ inability to save for retirement - or their lack of interest in doing so. The messy pensions tax relief system is doing nothing to help, but neither is ‘financial exclusion’, which boils down to the inability of consumers to get access to affordable financial products. That could be as a result of any combination of lack of access, pricing (possibly linked to individuals’ credit worthiness) marketing focus or financial literacy. In turn, that translates into higher interest rates on ever-increasing loans and retirement adequacy floating off over an ever more distant horizon.

    LeGrand is right, however, that there is a litany of half-finished pensions debates on the future of defined benefit schemes with weak covenants, GMP, the next phase of auto-enrolment, state pension reform, pensions for the self-employed and more, which need to be addressed at ministerial level and should not be overlooked  

    Yesterday’s Queen’s Speech will not have cheered anyone hoping for progress on any of the above. With the Conservatives still holding will-they-won’t-they talks with the DUP on forming a government, and the EU moving beyond polite wristwatch-tapping on the subject of Brexit, pensions was very much off the agenda. While there will be a new Finance Bill, which is likely to sweep up measures announced in the March Budget, there was little else to trouble the new ‘pensions’ minister. Gone is the review of the triple-lock (currently a bit-part player in any event, given increases in inflation). No mention of the state pension age review. And as for the more technical details of DB regulation, silence.

    Once a new government finds its feet – shod in leopard-skin kitten heels or otherwise – it will have its hands full with Brexit for the next two years at least. That does not mean domestic matters around pensions, or broader financial wellbeing or inclusion, can be ignored. Doing so will simply mean problems will be left to fester further as they sit in limbo. The new under-secretary of state will need to get started quickly, but may find his brief a long way down the list of priorities.

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