This is a note from Pension Plowman Henry Tapper, he is almost crying with happiness for Britain’s pensioners – today’s and tomorrow’s. This blog was originally published in July 24.
A couple of days following the General Election, I called for Torsten Bell to be the Pensions Minister. Recently I have lost short memory and it has taken Joanne Donnelly to remind me of this blog and other polite requests for him to be our pensions minister. Jo Cumbo was on to the news that he was available.
He’s had 6 months on the bench, a supporter but he’s been on the substitute’s deck. Now he’s getting the job proper and I wish him well. I am a fan and with no disrespect to Emma Reynolds, I see him as a pensions person.
Torsten Bell
Torsten Bell, ex chair of the think tank the Resolution Foundation, has been elected as a Labour MP.
Bell has previously described the rule that allows pensions to be passed on totally free of inheritance tax (or even income tax too if someone dies before 75), as “ludicrous”. https://t.co/WmXUNrk0Hv
— Josephine Cumbo (@JosephineCumbo) July 5, 2024
I’ve been quoted on social media as saying that Torsten Bell should be the new Pensions Minister, this is not quite true, I would like Torsten Bell to be the new Pensions Minister because he would bring to the job the intellect, experience and compassion the job needs.
It’s been said that Torsten Bell should work in the Treasury to get the job done, but that is supposed that the job of the Pensions Minister is really about tax. Tax incentives do drive saving and spending behaviour by the public (including me) but the issues we have with pensions are much wider than the decisions we take on private pension options and in any case , private pension options are themselves in need of reform. Bell has worked in the Treasury before , he would be helpful there but better elsewhere!
We need Torsten Bell to head up the impending review of workplace pensions promised by the Labour Party and now expected by a Labour Government. Whether Bell does this as Pensions Minister or from the Treasury or as a backbencher, he is the person to lead this review.
We have not had a genuine intellect in charge of pension polity since Steve Webb lost his job in 2016. We might argue that Ros Altmann fitted the bill . Stephen Crabb, Richard Harrington, Guy Opperman, Alex Burghart, Paul Maynard and even Laura Trott have all filled the role since then. Only Burghart and Trott survive as MPs while Harrington told me in 2017 he never wanted to hear the word “pension” again . He is now in the House of Lords.
But the role of Pensions Minister had been a full ministerial role, till 2017 when Opperman picked it up as a junior minister. The importance of pensions has been down valued since. I struggle, even though I am prejudiced to big-up pensions, to understand why pensions are diminished in political terms. It is not as if there isn’t a job of work to do
The Department of Work and Pensions has had some success in introducing universal workplace pensions through auto-enrolment and while the universality is tarnished by not including the self-employed or some younger people, most of us think of ourselves as having public and works pensions. The State Pension Age review, instigated some time ago, has yet to be published. We have made little progress on social care in the past 20 years and the issues surrounding the NHS and the ageing population seem no nearer fixing.
As the Labour Government gets to grips with worker’s rights , it needs to take the rights of workers to leave work with the dignity of a living wage rather more seriously than its predecessor. The allocation of resources from those at work to those too old and sick to work, is a burning platform. We need a great thinker within Government to tackle these problems.
I have just finished reading Torsten Bell’s Great Britain – how we get our future back?
A click-through will give you a good taster. It is full of thinking about how we can use our pension saving to better provide for our future both in a macro-economic and personal finance sense. I very much enjoyed it, but I thought I would as I have followed Bell since he left the Treasury and joined the Social Foundation in 2015. In his book, he sets the current problems with an ageing society in an historical context. He uses the past as a guide to the future in an intelligent way.
His inclusion in the new Labour Government is a great blessing to the country and if we have the good fortune to have his services in pensions going forward, I have no doubt we will benefit from it. I hope he is involved (if not leading) the thinking on workplace pensions and I suspect that in time we will see him make his way into Cabinet.
But for now, a ministerial position within the Treasury of DWP would be a start, my hope is for it to be within the DWP – as Pensions Minister – where he is most needed.
Back in 2010, I asked the same for Steve Webb. By a happy combination of circumstances I got my wish and I’m hoping that this blog is equally prescient about Torsten.
There are around 5m public servants earning a deserved defined benefit (DB) pension promise – not just those finishing or starting a night shift as you read this! So, I’m sure Torsten will also recognise that £1.5tn of accrued index linked (other national) debt.
The intergenerational fairness and indeed sustainability of these historic pension promises depends on GDP growth of CPI+3% pa. Future promises, ~£50bn pa, only require GDP return of CPI+1.7%. Unfortunately, the Regulations governing the setting of (employer) contribution rates, in particular the allowance for past service experience, requires the input of expected rather than actual GDP growth. A Freedom of Information (FoI) request however revealed the scale of this actuarial valuation hypocrisy and hence the implications for future taxes –
“Approximated potential impact on NHSPS (E&W) 2012 valuation (if 2012 valuation had allowed for 8 years of GDP experience):• around a six-fold increase in deficit at 2012 valuation from £10.3bn to around £60.2bn• around a six-fold increase in deficit reduction contributions from 2.2% of pp to 12.9% of pp, increasing the employer contribution rate to around 25% of pp”
There are of course other assumptions and elements of experience contributing to the valuation result but that is pre-Brexit, pre C19 and the recent recession. A further FoI request involved H M Treasury citing the FoI Act 2000 S35(1)(a) exemption – “development of Government policy”, so it is old, difficult, work in progress.
A current Ponzi scheme comparison? I suggest a Royal Commission and indexation linked to actual GDP achieved.
I am a massive fan of Torsten, he has the right grasp of the issues and now he needs to be given the ability to influence the solution. One of the ways to boost housing is to channel pension savings into the housing market via long term fixed rate mortgages. One of the best assets risk return assets matching pension income as well as systemically stabilising and reducing pension time bomb by helping people own homes. Long term assets, long term liabilities, no better fit.
“It’s been said that Torsten Bell should work in the Treasury to get the job done”.
I had experience in a totally different area where regulation had become moribund and the responsible Government department had adopted a pointless (except to protect themselves) over-bearing regulatory regime. It was during Tony Blair’s first government that, very much to the surprise of those involved, the Treasury came onto the scene and basically swept away the regulatory regime, replacing it with self assessment based on Regulations drafted following a swift but inclusive consultation process.
At the time Gordon Brown was seen as a ruthless Chancellor controlling the purse strings with a very tight hand (it was in 2000 and 2001 when government borrowing reversed into a repayment of debt).
This was also at the time when a quick succession of forgettable Pensions Ministers were struggling with the aftermath of Maxwell and the increased cost of a defined pension benefit from the halving of real interest rates. In a public meeting I advised the Minister that the best thing they could do is not to have yet another Pensions Act but to empower trustees to deal with their particular situations using the equitable principles of the Common Law.
Could we expect the same from Rachael Reeves?
Brilliant comments.
The more Govt is involved, the greater the propensity for short term tinkering, and a continuation of the indirect confiscation of private sector pension schemes / savings. Access to such vast pots of capital will continue to be too attractive to politicians feeding short term electoral needs.
pcbpensin is right – less govt intervention and give trustees the responsibility and tools to find the solutions, as they did before the Brown/Blair interventions that had delivered us into the current mess.
I am glad you like the new minister jnamdoc
A blog whose dream came true – 6 months late