No! Pension Minister!

caroline nokes 2

Our new parliamentary under-secretary Richard  Harrington

 

 Did she jump – was she pushed?

Speaking on Vanessa Feltz’s LBC show this morning  (goo.gl/LQ99b8 1:17:20-1:31:21) , Ros Altmann said it was a bit of both.

The events since her “resignation” suggest that the role of Pensions Minister was a luxury Theresa May felt she could do without – there will be no pension minister going forward. This blog charts how events have turned out and suggests that the door is now open for the Treasury to take the P out of the DWP.

 

Baroness Ros Altmann, CBE

House of Lords, London SW1A 0PW

The Rt. Hon Theresa May

Prime Minister

10 Downing Street, London SW1A 0AA 15 July 2016

Dear Theresa,

Congratulations on your appointment as our new Prime Minister and I am so delighted that our country will have the benefit of your wisdom, good sense and experience.  I believe you have the qualities most needed – not least your determination to pursue policies in the long term interests of the country as a whole.

I am honoured and grateful to have had the opportunity to serve in Government and look forward to continuing to advise on pensions, finance and later life policies from the House of Lords benches.

As an economist and investment professional who has been involved in all aspects of pensions for nearly 40 years, I am at heart a policy expert, rather than a politician.  I have spent my entire career trying to help as many people as possible enjoy better later life incomes, encouraging consumer protection and social justice.  

As a Minister, I have tried to drive positive long-term changes on pensions from within Government and ameliorate some of the past mistakes which I have cautioned against.  Unfortunately over the past year, short-term political considerations, exacerbated by the EU referendum, have inhibited good policy-making.  As the country heads into uncharted waters, I would urge you and your new team to enable my successor to address some of the major policy reforms that are needed to improve pensions for the future.

It is vital that we continue to roll-out the successful auto-enrolment programme to ensure all employers offer pensions to their staff.  Regardless of the economic challenges, everyone will need to have some money set aside for later life and pensions are the best way to do so.  We must, too, address the crisis in social care funding and help people provide for potential care costs as well.  In order to help fund this, we should look to develop a ‘one nation’ lifetime pension.

A ‘one-nation’ pension – long overdue reform of pension tax relief:  Our present ineffective and complex incentive structure for pension saving costs over £40billion a year.  It favours the highest earners disproportionately, while leaving lower earners seriously disadvantaged.  We need a radical overhaul of incentives, which can offer more generous help than basic rate tax relief, but as a straightforward Government pension contribution for all, and would end the discrimination against Britain’s lowest earners who are forced to pay at least 20 per cent more for their pension than higher paid workers.  This ‘one nation’ pension would see withdrawals taxed in later life, so that people have a behavioural incentive not to spend the money too soon.

A major review of Defined Benefit pension scheme funding and affordability:  We must urgently assess the future of our Defined Benefit pension schemes.  Given the risks of diverting corporate resources to one favoured group of workers, the need to ensure adequate resources for younger generations’ pensions, the time is right to properly consider the issues facing employers trying to support Defined Benefit pension schemes and potential use of pension assets to boost economic growth.

Fair treatment for women and better communication on State Pensions:  On the issue of women’s state pension age, whilst I respect the democratic decision taken in 2011 by our Parliament, I am not convinced the Government adequately addressed the hardship facing women who have had their state pension age increased at relatively short notice.  They were not adequately informed.  I also believe we must devote resource to widely communicating and publicising the coming changes to state pension age for both men and women.

I remain deeply committed to helping our great country make better pensions policy for the British people and to planning ahead for the long-term future of our ageing population.  I stand ready to help my successor and to offer my policy expertise.   As you set a new course for our country at this very difficult time, I wish you every success.

Yours truly,

Ros Altmann

This is the Ros Altmann’s resignation letter. She will be succeeded by Richard Harrington

 

Her Ministerial obituary

I am very sorry to see Ros Altmann go, though she may be able to do as much good from the Lord’s benches as she was allowed to do from her position of office.
She was made to make policy but not as a politician. She made no policy in her fifteen months in office though the Pensions Bill is in the making.
During her tenure, she put on hold two of Steve Webb’s ideas, the Defined Ambition and Pot Follows Member initiative which stand like half completed buildings.
During her time , the New State Pension arrived and so did the problems for some women over state pension inequality.
During her time, companies with defined benefit schemes continued to fail.
The major reform she wanted to see, that of our pension taxation system, has not been put to parliament, instead there has been further strengthening of the ISA product with the LISA product.
The idea of a “one nation pension”, mentioned in her resignation letter appears to be flat rate, EET and still-born.
Like Ros herself, the one nation pension taxation system never found a voice. The statements she will be remembered for are those she made for herself, the first at the point when Ian Duncan-Smith resigned, the second at the point of her resignation.

Ros Altmann’s appointment – A brave experiment or a cynical stunt?

The experiment has failed but there are positives. The Pension Auto-Enrolment project continues to prosper, the PPF is going from strength to strength and we look to be making progress through the Treasury towards a pension dashboard.
There are a number of initiatives that struggle on , largely unloved, secondary annuities are still on the table, we are slowly working towards some definition of value for money with which we can measure the performance of our workplace pensions and the Pension Regulator’s DC code is moving forward governance of occupational schemes (including workplace master trusts).
But pensions are assailed by “bad ju-ju”, most especially by scammers looking to “liberate” our good pensions into their back pockets. Pension Wise exists but is not doing all that it set out to do and will need more help if it is to provide the first line of defence, let alone put pension savers on the front foot.
The FCA’s recently published terms of reference for the Retirement Outcomes Review show how un-joined up FCA and tPR regulation still is. The Treasury are more than ever in the ascendency and – as we suspected would happen at her appointment, Ros Altmann’s positioning has simply left the door open.

A smooth handover?

enigma2

Taking the P from DWP

 As Paul’s tweet shows, there is  confusion about what happens next (suggesting that the DWP weren’t prepared for succession)
Ros Altmann’s departure would have left  the Pension Ministry to either Penny Mordaunt or Damian Hinds .  Despite reports in the pension press that Penny Mordaunt has the post, we were left waiting for an official announcement.
enigma
Penny is mainly known for jokes about cocks, appearing on Splash and for comments on Turkey’s likely joining the EU. She is to be Minister for the Disabled
mordaunt

Penny Mordaunt

Damian Hinds is either less or better known (possibly both), he is to be Minister for Employment
damian hinds

Damian Hinds

Caroline Nokes couldn’t get the job , but she is charged with welfare delivery and is an under-secretary.
caroline nokes

Caroline Nokes

Which leaves us with the extravagantly attired Richard Harrington -parliamentary under-secretary for pensions,  PENSION MINISTER! – but not a minister of state,
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Richard Harrington

What pensions knowledge there is in parliament , is within the Pensions Select Committee and in the Lords but as the comments below point out, that’s not saying a lot.
In a well judged piece in the Daily Mail, Rachel Rickard-Strauss laments the loss of Altmann and expresses concern that Richard Harrington is not being given the leg up a full Minister of State would have got.
Let’s hope that Richard Harrington ,our new Pensions under-secretary will be supported by the excellent DWP policy team headed by Charlotte Clark. Just as we need an opposition to Conservatism, we need an opposition to the Treasury. Right now, we don’t have either.
.

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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5 Responses to No! Pension Minister!

  1. jpklawlor says:

    Another good and thoughtful post. Thank you Henry.

    Best wishes

    Jonathan

  2. Gerry Flynn says:

    When is she going to give up her title as it only came with the job, therefore no job, no title?

  3. Jeff Chipps says:

    Don’t count on DWP Select Committee having good knowledge of pensions. One member in particular totally ignorant on some state pension matters, to the point of dangerously misleading others.

  4. henry tapper says:

    I hope that Ros will get recognition for the work she has done both in and outside politics, her Baronetcy is the outward show, but there are many people who have benefited from her campaigning , which I am sure will now become a lot easier for her to do again.

    The Select Committee has good people on it, but they cannot be expert in all aspects of pensions, they are amateurs at our game but like MNTs, they speak the language of ordinary non-pension people and we should listen to what they say.

  5. Terence P. O'Halloran F.C.I.I. Ch FP says:

    How can you, or Ms Altman justify 31.8% of an individuals earnings over LEL going into pensions and social benefits? The Federation of Small Businesses gave the notion of automatic enrolment to government in 1999 (STEPS) to replace, not augment, SERPS. Now we have full NI deductions PLUS auto enrollment as a burden on employment and a feeder for government funding through investment in largely fixed interest funds which produce a pitance in inflationary terms. Ros , like you Henry , is a socialist conrol freak with little or no experience of working class/midddleclass individuals or their aspirations in life. 31.8 % of earnings above LEL is just too much on top of taxation.

    SERPS benefits have been mis appropriated in persuit of this ‘JUST CAUSE’ . Highway robbery cannot be justified. Auto enrolment would have worked if the FSB model had been followed, and the cost would have been justified because the investment would have been in industry, NOT government, to show a fulsome return and long term benefit. The debate appears to ignore one of the most generously funded and equally beneficial pension schemes in the world, National Insurance, 2/3rds of which provides pension benefits to those that conribute to that PAYG insurance scheme. Neither Australia nor Chile, often quoted as support for even larger conributions to Auto enrollment (quote Altman) have a supporting NI equivelent pension provision.

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