Pensions & Politics
I attended a seminar yesterday at which former Pensions Minister Steve Webb spoke. He now works for a pension provider in both the private client and corporate markets, Royal London.
We sat attentively listening to Steve but at the end of his speech on pensions and related issues we had the opportunity to put questions to him.
A few years ago, Steve Webb was widely promoting a ‘Pot follows Member’ solution to a problem in the pensions world in the UK. The issue Steve was trying to fix, particularly post auto enrolment, was that of the numerous, small pension pots that you could acquire should you move job relatively frequently, as many people do.
Steve stated yesterday that the average size of a NEST auto enrolment pot is £300.00. The ‘Pot follows Member’ idea was to facilitate a no-cost, or very low cost, process for these pension pots to be consolidated into your next employer’s scheme when you change job.
Whilst on the face of it this is a good idea and is attractive to most people it does have drawbacks. Which is the best pension scheme? By default your current employers.
For the majority the idea was a good one and the general public could see the benefits.
I asked Steve what has happened to ‘Pot follows Member?’ The answer was it has been shelved.
A peer, sitting next but one to me in the seminar, asked Steve Webb ‘Why the Lifetime Allowance had been lowered on his watch?’ Steve’s answer was basically that he had no control over this and he only became aware at the time of the announcement. This was a Treasury decision.
These two questions and answers detailed above raise some really key issues:
- Pensions are long term issues and should be cross-party policies and strategies
- Within a Government you need to have a cohesive strategy on pensions. We don’t need the DWP, the Treasury, HMRC and the Pensions Minister pulling in different directions
- Pensions and long term planning are rarely easy bedfellows for politicians. Politicians concentrate on the short-term. Will this decision help us to be re-elected?
An interesting meeting that shed a little more light on the problems of our political system.
Steve Speed
14/12/2016