Why I feel sorry for Matthew Taylor.

You can’t help feeling sorry for Matthew Taylor. He took a job with some certainty that he would get the support of his Prime Minister and while Theresa May turned up for his press conference, her speech was more about her Government’s capacity to survive than the Taylor Review.

Clearly a lot happened in the week prior to publication. We’d seen a bleary eyed Taylor at NEST insight last Wednesday apologising for incoherence with the excuse he’d been up all nights agreeing amendments.

The final version , which became available yesterday here, shows plenty of work was being done right up to print deadline.

Perhaps the original intention – to keep the report high level – changed. Taylor had answered questions at NEST insight with a straight bat. The report would stop short of saying anything specific about pensions. But less than a week later, here was a Government appointee openly endorsing the ideas within a report from Aviva and Royal London, itself fresh off the press and less than two weeks old.

For instance, when the individual provided HMRC with their self-assessment, as well as providing funds to cover income tax and NICs liability, they could also be expected to provide 4% of income towards a pension unless they choose to opt out. For those who already pay 4% or more into a private pension, this would be treated in the same way as it is now. A similar approach is set out in the final section of Solving the under-saving problem among the self-employed, an analysis by Aviva and Royal London in June 2017.

The solution will no doubt feed into the work being done by Jamie Jenkins, Ruston Smith and Chris Curry on pensions inclusion.

What Taylor is exampling is not auto-enrolment; the auto-enrolment solution would be more elegant and mirror contracting-out through a personal pension. Higher NICS would be charged by default and money collected using the existing apparatus by which rebates were paid to insurers through the DSS/DWP.

The auto-enrolment method has the advantage of being tried and tested, Government incentives can be applied according to social good and best of all, the Treasury would not get control of our money. The retention of the DWP as the administrators of pensions is -to my mind – a political imperative!

Unfortunately I may be fighting a losing battle here. It would have been good to have had the chance to explain to Matthew Taylor that collecting pension contributions through increased demands from HMRC is not sending the right messages at all. If you want pensions to be seen as tax then let’s be straight about it and move to a pay as you go unfunded state pension top-up. An HMRC version of SERPS/S2P if you like.


Why all the new stuff?

I have to admit to advising Money Marketing that we should not expect any reference to the Aviva/Royal London report in the Taylor Review. The Review is entitled “Good Work” and Taylor himself he would not be stepping further down the ladder of abstraction.

My guess is that Taylor, late in the day, realised that gifting a lame-duck Government a document without any hard proposals, would consign it to the top-shelf of the Cabinet Office’s unread periodicals cupboard.

If he could not get engagement from the Government, he certainly would not be remembered within the private sector for anything more than homilies on best practice (more or less the charge levied at him by the unions).

The central contention that we move to “good work” through good intentions has been derided by those who see the impact of bad work on those most vulnerable in society.

The best way to achieve better work is not national regulation but responsible corporate governance, good management and strong employment relations within the organisation, which is why it is important that companies are seen to take good work seriously and are open about their practices and that all workers are able to be engaged and heard.

Taylor – a former adviser to a Labour Prime Minister – has been distanced from his natural support by a left resurgent in confidence. He has aligned himself with a Prime Minister and Chancellor who are damaged goods. He has no-one to support his proposals but the private sector.

I fear that the Taylor Review will be remembered less for its “good work” than for its endorsement of Hammond’s fiscal reforms of national insurance (announced and retracted at and after the budget). It will be remembered for handing the private sector up to 6m new customers as auto-enrolees and it will be remembered for Matthew Taylor’s hapless look as he realised just what a political flop, this report has turned out to be.

As I said at the start, I feel sorry for Matthew Taylor.

 

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions. Bookmark the permalink.

One Response to Why I feel sorry for Matthew Taylor.

  1. DaveC says:

    All that hard work to make self employed pay into pensions they might not want and opt out of any way.

    If state benefits were more clearly defined I’m sure many would be happier to pay more, but while NI is muddled in with the total income of government, only a madman would hand over money with no ‘written in stone’ future promise.

    What will my state pension be in today’s terms at my retirement?

    Age pension can be taken, varying year on year.
    Amount, varying by triple lock and an array of massaged or irrelevant inflation values.
    Cost, NI goes up and up. Never down.

    AE pension, no idea on tax levels levied at retirement, nor future state legislated contribution amounts, so cost vs return is impossible to get a handle on.

    You may as well call uk’s state pensions “snake oil finance”, brought to you by “knee-cap revenue and customs”

    The fees to manage money in pension funds *must* be good, considering your average bank gives you nothing for a deposit and repeatedly tells you they make nothing from your accounts!

    Aviva and Royal London must be frothing at the bit to get SA AE contribs flowing into their hands!

    I’m out until the pension industry and gov can sell me an investment case that stands even the basic kind of scrutiny you’d see on say ‘dragons den’

    Like

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