Sad to say, I doubt that more than a tiny percentage of my readership, let alone the general public know who Labour’s shadow pension minister is. Since Gregg McClymont lost his Cumbernauld seat in 2015, the post has been occupied by Jack Dromey and now Matt Rodda. Neither have galvanized popular support for a Labour pension policy, mainly because there has not been one.
At last night’s Fabian Society webinar, entitled “A perfect Pension System”, we had a rare chance to hear from Matt Rodda. Sadly what we saw was a Shadow Minister who has yet to get on top of his brief.
It is a basic duty of any shadow minister to be aware of recent legislation that has been passed in parliament . Rodda wrongly ascribed the banning of pension cold calling to the Pension Schemes Act.
The Privacy and Electronic Communications (Amendment) (No. 2) Regulations (the Regulations) came into force on 9 January 2019 with the effect of banning cold calls in relation to pensions. The long awaited ban covers unsolicited calls, emails and text messages about pensions.
The provisions of the Pension Schemes Act with relation to fraud are set out here. A basic misunderstanding of recent legislation points to a lack of engagement with the issues facing ordinary people, who depend on firm scrutiny of the Government’s agenda by the Opposition.
The problem we face
In my view, the biggest challenge facing the UK is not in the creation of pension wealth, we are doing this through auto-enrolled workplace pensions funded by employers and employees who have done the heavy-lifting to make auto-enrolment work. AE was a Labour idea, implemented largely by a coalition of Liberal and Conservative politicians. All parties deserve praise for what is a genuine policy success.
But we are now faced with a decade where 9 million people will access their pension pots without a clear pathway to a pension. Stephanie Hawthorne characterized this situation last night as “chaotic”. That is what it looks like to me both as a consumer and a commentator. The long term solution to this problem is risk sharing through collective pensions but the DWP has currently only 3 people allocated to its CDC team.
We face a major problem with such a lack of resources, that we are not expecting any meaningful regulations on multi-employer CDC plans , let alone the much needed decumulation plans – till 2023. Is there nobody within Her Majesty’s Opposition who is prepared to call this out?
We know the problem and we know the solution. But we are not putting public resource behind seizing the main chance. Instead the Government is fannying about with simplified pension statements, stronger nudges to Pension Wise, statement seasons, mid-life MOTs, sidecar savings and any number of hair brained initiatives while its own pension- Nest – isn’t even able to pay a series of monthly withdrawals without a member having to request each payment.
What should Labour be doing?
It is right that Labour put pressure on the DWP to get the State Pension sorted. This has been the priority for the past nine months. It should also be looking closely at the interaction of pension drawdowns and annuity payments with pension credits and the taper on universal credit. Labour should be pressing for a swifter resolution of the net pay anomaly and demanding that incentives due to low paid members in occupational schemes, including Government schemes, be paid their incentives retrospectively.
Labour should be putting up concerted opposition to the miserly increase in the state pension and demanding that those who depend on the state pension are not required to take a real cut in income in April 2022.
Labour should be asking serious questions about contradictory statements coming from the DWP and the Pensions Regulator. Last night we heard of a meeting of the Association of Pension Lawyers where a TPR representative apparently questioned the DWP’s green agenda for pensions on fiduciary grounds. Labour should be seeking clarification on such matters. We cannot have a Pension Minister calling for Pension Schemes to re-risk and build Britain back better, while his Regulator is finalizing its DB code to do the opposite.
Labour should be questioning why the delivery of the main planks of Government pension policy – the pension dashboard and the development of collective DC pensions is taking too long.
Labour needs to be authoritative and that means having a Minister who attends public meeting like this one having been properly briefed.
It can be done
If Matt Rodda was listening to Chris Curry’s excellent analysis of what a perfect pension system looks like, he would have a framework for a Labour policy on pensions. We need a pension system which is sustainable, adequate and fair.
We are not that far from achieving this. Labour does not have to disrupt successful policies , it should be challenging failures to implement and ensuring that the system can operate without conflicting messaging,
If we can use the money building up in workplace pensions to pay people pensions, if we can continue to accelerate the state pension through the triple lock and if we can gradually increase the level of saving we make through both payroll and through the self-employed’s taxation system, we could see the coverage in the UK that has been achieved in Australia.
But there needs to be a prioritization of pensions by the Labour Party Executive , that doesn’t seem to be in place today.
The Fabian meeting , attended by Gregg McClymont , reminded me how far Labour has slipped from the days of the Hutton report where it created and controlled the agenda. Right now it has no hand on the tiller and is currently an irrelevance as far as pensions are concerned.