Yes pensions minister

What was Steve Webb doing last week in launching aspirational pensions?

Apparently, senior strategists within the DWP were as nonplussed as the majority of his audience as Steve called for a return to the pensions culture that fostered the defined benefit culture.

Had the minister not read the GAD report that so conclusively dissed the ACA’s call for CDC?

Did the minister not understand the anarchy that would ensue were companies allowed to run pensions as they wanted to rather than to the gospel of the DWP-tPR-big four and the entire legal industry?

Was the minister aware of the threat that such a move would represent to the livelihoods of those in his own department which were intricately tied up with the current regulatory system?

Worryingly for Sir Humphrey, the minister had left his cage and like a captive canary released to nature, he was chirping away with no regard to ministerial protocols or more importantly the interests of his department.

It’s very rare in Government that we see a minister take such a risk, but then it’s rare that we have a minister that knows what he’s doing.

According to an eminent lawyer I was meeting yesterday, the best thing that Steve Webb could do now is to sack the majority of the pension staff at the DWP, abolish the Pension Regulator, pack his golf clubs into the boot of his car and go on a three year sabbatical. The lawyer in question was of the mind that the best people to come up with a system of collective pensions that worked for the member were in the room in which we sat.

Flattering as this was, I do not think that the offices of a City Law firm are going to spawn a brave new world in pensions. The solutions that the eminent City Lawyer was putting forward, a system of book reserve pensions that put me in mind of a Graham Greene novel, looked as if it might be introduced without the need for primary legislation (eg the DWP lawyers). Other solutions, based on a funded DC system have been temporarily kiboshed by the exasperating DWP pronouncements after the original Bridge Trustees ruling. Unwinding that would , I am told , need help from the people that caused the - the DWP mandarins.

Conspiracy theories abound as you approach the hallowed halls of power. One senses a loss of perspective.

Sitting as a layman in a court of £1000 an hour super-legal-big-wigs, I felt depressed that the interests of the people for whom all this reform is supposed to be in aid of, seemed of no importance to anyone.

As I gazed across the City , 15 floors above the scurrying ants that shimmied down distant pavements, I felt as Steve Webb seems to have done. From where I was sitting, people weren’t in the perspective – except as insects.

To be a big-hearted intelligent person charged with getting pensions right looked a thnkless task. It must be hell to be surrounded by the small minded careerism that I hear about from those who have tried to take on the DWP- read Alan Higham’s blog on getting help for his mother to get a better flavour.

More and more I feel that any solution to the national problems of providing proper pensions to give security to people’s old age does not come from the DWP. But nor does it come from the City. It will come, if it comes at all, by allowing the voices of pension practitioners, of those who understand the nature of members and from the ordinary people who know their minds, to be heard.

I am not talking focus groups here, I’m talking about a genuine consultation between Steve Webb and those people who care more about lasting solutions than short-term profits.

People, like Webb himself, that Beveridge would have been proud of.

 

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly and the Pension Plowman
This entry was posted in auto-enrolment, dc pensions and tagged , , , , , , , . Bookmark the permalink.

7 Responses to Yes pensions minister

  1. Kate Brookes says:

    Hey Henry,

    I am sending you my ‘Pension Peach of the week’, not only because you are a dude, but also as a response to why the past arrangements were so unsustainable, particularly DB. A client paid in £ 5,836.75 between 1994 and 2002 to his company scheme. He now has an indexed linked pension of £3,678.12 per annum, or a CETV of £64,680. INSANE.

    I also liked the farmer who had a RAC into which he had paid £10 a month since age 20 and ended up with a £100k pot at an 8% GAR..

    Loving old and unsustainable pensions, loving giving my clients the news.

    ..it is the surely the end of the feast though…suggest we enjoy the memory of a real baked Alaska rather than we had never eaten it!……

    • Tim Webb says:

      Yes, but if the employer paid 3 times the employee’s rate of contribution with on average 14 years’ investment returns at 7.5%pa this equates. Pensions are not cheap!

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