Blog: Be careful what you wish for

It wasn’t long ago when the pensions industry was begging the government to stop tinkering with pensions, to give them a break and allow the significant reforms of this decade to bed in.

To be fair, the government did exactly what was asked. Faster than you can say ‘Brexit’, parliament’s interest in the pensions system – and seemingly anything that didn’t directly involve the EU negotiations or in-party squabbling – decreased. Soon it was back to the conveyor belt of Pensions Ministers passing through without enough time to make an impact, with even the horrifying whispers that the role itself had been demoted by government.

Come back, we said, lavish attention on us once again. There’s so many things we didn’t get to do together. A ‘band-aid baby’ was created in the joint government/industry pensions dashboard project, but it wasn’t enough. The project soon became ‘industry-led, government-supported’ rather than an equal partnership. And then, silence.

But, the end of parliament having its head turned with Brexit, at the time of writing at least, is finally in sight. Deal or no deal [who knew UK politics lately would bear so much resemblance to Noel Edmond’s TV career - including Noel’s House Party and Mr Blobby] or extension, place your bets now.

Along with the pensions dashboard, there’s the Lifetime Allowance, Annual Allowance, tax relief, superfunds, self-employed, collective DC – the pension sector’s list of issues for the government to address looks as long as the letters many over-excited young children are already penning to Santa now.

Indeed, the industry is hoping Christmas will come early, with the long-awaited Pensions Bill expected to be included in the Queen’s Speech, currently scheduled for 14 October.

Assuming attention finally turns back towards pensions, how many issues will be ticked off the wishlist? There is scepticism that parliament will address everything desired, with some thornier issues, such as tax relief, potentially kicked into the long grass once again. And, judging by the recent party conferences, they are right to be concerned, with pensions barely a mention across the three main political parties.

Yet, even if the Pensions Bill has everything hoped for, is that still a good enough sign that the government is truly engaged with pensions?

We’ve seen before the problems that occur when politicians take a sudden, superficial interest in pension reform as a quick vote-winner – yes I’m looking at you George Osborne – without fully considering the consequences of the changes made.

While Osborne’s freedom and choice reforms freed people from the requirement to purchase an annuity, it gave that freedom before many were prepared to deal with the choice available. For instance, the FCA recently announced that more than half of all pots accessed in 2018/19 were completely emptied, and more generally, there has been an explosion of scam artists ready to relieve people of their pension savings.

The many changes made, in quick succession, to the Lifetime and Annual Allowances, saw a chaos-theory, butterfly-wing flapping, effect on doctors’ workloads, with shifts being turned down and surgeries cancelled as a result of staff fearing to go over the allowance limits and reaping a large tax bill.

This summer saw confirmation that the government’s changes to judges’ and firefighters’ pensions were discriminatory on the grounds of age, and that the ruling applies to all public-sector schemes, with rectification to cost an estimated £4bn.

Luckily for the government, it has just avoided a potential bill of £181.4bn between now and 2025/26, as the Backto60 campaign lost its court case, which claimed that rises to the state pension age for women born in the 1950s were discriminatory.

The grievances of the Backto60 group, along with the Women Against State Pension Inequality (Waspi) date back to the 1995 Pensions Act – nearly 25 years ago. A long viewpoint needs to be taken when considering adjusting retirement provision.

That is why I was pleased to hear Pensions Minister Guy Opperman recently announce his support for the creation of a new Pensions Commission; something Pensions Age has long advocated for. He stated it is necessary to bring together political parties to form long-term retirement policy, and that it is something that the Department for Work and Pensions is looking into.

So while the Pensions Bill finally being delivered may be many a pension professional’s wish, the government taking a cross-party, long-term view of the country’s retirement provision really would be a dream come true.

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