– a group of civil servants (the National Audit Office) have decided to audit the work of another group of civil servants (the Pension Regulator) reporting to another group of civil servants (the DWP). The point of the audit is to decide whether the Pension Regulator has been properly regulating the pensions of those not enjoying the plush pensions enjoyed either by those at the Pension Regulator, or the National Audit Office, the DWP or indeed the Members of Parliament to whom their report is ultimately addressed.
The NAO are going to try to work out whether the Pension Regulator has failed in its duty to properly monitor defined contribution pension plans, the kind of plans you will be enrolled into as a result of the DWP’s auto-enrolment program – if you are in the private sector that is.
If you are at the DWP or TPR or NAO or if you are an MP, you will of course be enrolled into a plush Defined Benefit Plan. By coincidence this is the week then the last private company (Shell) still offering a defined benefit plan of the final salary variety called it a day.
So it’s left for the haves to lecture the have nots and the have nots to pay the haves for the privilege.
Why we should be concerned about this ridiculous state of affairs is that while those in these plush guaranteed schemes sail serenely into retirement, around 500,000 people will hit the buffers in 2012, having to encash their DC pensions at a time when their pension purchasing capacity is at an all time low.
Let us not forget that the capacity to fund these DC pensions is determined by the willingness of individual workers (and employers) to sacrifice pay (or profits) to make sure they (or their staff) are not a burden on the welfare state.
In reality, a large proportion of those in the private sector have little or no pension savings , so much of their income being paid through taxes and national insurance to meet the bills of the welfare state and the pensions of the DWP, TPR,NAO and the MPs.
Indeed we are paying for these civil servants to strike against us as we have the temerity to question why they should be getting super plush (final salary) rather than very plush (ordinary defined benefit) pensions
It doesn’t stop there. We are now paying for these civil servants to investigate each other to determine how they are policing the pensions we the private sector- have set up for ourselves.
We do not need an investigation to tell the Pension Regulator , the DWP, the NAO or Steve Webb they have done a rubbish job. We only need to point to the pathetic state of the pensions arising from people’s lifetime savings.
The reason these pensions are so poor is because the Government with a capital G (meaning the whole damned shooting match) have allowed private sector defined benefit pension schemes to become untenable through the imposition of stealth taxes, mark to market accounting, spurious complex regulations and now the threat of EU imposed solvency regulations which would wither the hand that fed.
While they have screwed up quality private pensions for the private sector, they have done nothing to promote public alternatives. They have wound down SERPS/S2P, devalued the basic state pension and failed to offer public help to the millions of private sector employees (including self employees) faced with the long-term consequences of Government policies that have driven long-term bond yields to their current state.
Instead they have dithered around, taking side swipes at pension charges (stakeholder pensions) but avoiding the big issues we have to do with portability, legacy charges, inappropriate investment options and most of all the hopeless inefficiencies of the pension decumulation process.
Rather than awaiting a report from a bunch of civil servants, on another bunch of civil servants reporting to another bunch of civil servants, I’m going to shout from the rooftops for some of my taxes to be redirected from lining the civil servant’s nests to providing proper pensions for the private sector.
This can be properly achieved by scrapping the NAO audit and redirecting the money into creating a new type of collective pension for those with DC pots retiring in the next ten years.
A collective pension which is insured by the tax-payers who generate the wealth to pay for the DWP, the NAO and TPR.
It will of course need the Government to stop throwing money down the drain in Borough High Street. We need to be winding NEST down for a few years. It will mean cancelling the NAO enquiry – the results of which we know in advance and it will require some positive thinking on how we use the resources that the Government has at its disposal.
With the push for auto-enrolment- at least for the smaller firms-on the back burner, let’s hope that with this audit we may at least get some proper change. We might even get somebody in charge of the Regulator’s DC team who knows what he or she is talking about.