I have just read an article by Sophie Baxter that puts numbers to the failure of David Cameron to create a one nation Government. It explicitly draws parallels with Cameron’s oration to the nation on entering #10 six years ago. It may even remind us of the abstractions of Margaret Thatcher as she quote St Francis Assisi.
It excited that nervous sense of unease that developed in my stomach as I heard Theresa May talk last night about social justice. We have been here before and nothing much has changed.
I won’t rehearse Sophie’s arguments, but I will draw specifically on my experience of working in financial services in the years since the coalition.
For all the promises of a fairer and more consumer centric pension system, little has changed (for the better)
- the great defined benefit schemes, forty years in the making, have crumbled as a result of low market returns, negative gilt yields and mark to market valuations
- the annuity system that underpinned defined contributions has collapsed and been replaced with the freedom to take financial advice, be a fiscal muppet or try some DIY retirement income fix.
- the costs of our pension saving remains unknown, know fraudsters stalk the savings of the most vulnerable, a financial institutions convicted of fraud administers our national retirement savings plan
Worst of all, our retirement savings system persists in offering tax hand outs to the rich and little or nothing to the poor. We give 45% tax relief to our wealthiest but we don’t even pay the promised savings incentives to the poorest in the net pay system.
This is allowed to happen by the great pension authorities, the DWP, tPR, PLSA, PMI and FCA.
Today the last of these, the FCA has published the terms of reference for its Retirement Outcomes Review.. We will be responding to it forcefully.
We can’t rely on the past to make good the future
Yesterday a senior member of the Investment Association wrote to me , hours before Theresa May got up to speak with these words.
I’ve never fully understood why and when it became so personal between you and the IA, but it’s a shame.
It is not a shame. What is a shame is the abject lack of accountability of those like me who have been priviledged with a good education, inherited wealth and all that society could give, to help create a fair society for those who are coming behind us.
The point of the Transparency Task Force was not to cause civil insurrection , or to exercise the personal demons of Henry Tapper, but to make it easier for those who own the pension rights, whether insurers, trustees or private individuals – to understand and take control of the costs of money management.
What I have seen in Government (particularly since May 2015) is the failure of those in a position of power, to exercise that power for the benefit of what Theresa May yesterday called social justice.
The burning injustices that May referred to yesterday do not go away by having an easy time at the Investment Association. The difference between “just managing” and not managing , can be down to the amount taken out of our lifetime of savings. It can be down to not getting a Government incentive on your pension contributions, it can be down to having a proper plan to spend the money saved for retirement.
Since 2015, this Government has taken away the opportunity many of us were giving our time to (at nobody’s expense but ourselves) to create a collective way for people without the means to pay for advice, without a DB pension, to avoid an annuity, cash or drawdown. I am referring to the blocking of progress towards a CDC solution for “decumulation”.
The aims to reform tax relief to make for a fairer means to spend our nations money were deferred from last year’s autumn statement to this year’s budget and then shelved in favour of not upsetting the public before the referendum.
The promise of a fair system of workplace pensions resulting from the OFT report has been all but extinguished with what little hope we had for a proper way of understanding value for money buried by a timid FCA, a plethora of greedy consultants and the dead hand of the Investment Association.
Braver and Stronger
If we are to have that fairer society that Theresa May talked of, we will need to be braver and stronger than we have been till now.
That means doing stuff, not talking about it. NEST should do something about lending their CIO to give credibility to the IA’s filibustering (rather than threatening me with Ultra Vires writs).
Ros Altmann should reinstate the CDC regulations writing so we can have a proper default for spending our DC pots by 2019.
Hammond should dust off the proposals left dusty on George Osborne’s top shelf and institute a root and branch reform of the taxation system which so unfairly underpins pension saving.
Above all , we should turn the hearts and minds of our nation of small business to the advantages of workplace pensions, what it brings them as employers and how their staff can benefit from the work they do , the money they earn
This cannot be done with words, it must be done with actions. I will continue to do my bit through www.pensionplaypen.com and through promoting the great work of my employer First Actuarial.
Do I think things can better?
They cannot get any worse than the disaster of the last 14 months.