By David Brooks, Technical Director, Broadstone
While creating space for a third way was perhaps well worth investigating, it came ten years too late and was further confused by George Osborne’s new flexibility curve ball. Steve also did float the idea that DC pensions should come with a money-back guarantee. This was one of Steve’s rare moments of looking more foolish than he has ever done before or since.
However, one of Steve’s great achievements may be leaving the detailed explanation of State Pension reforms to his successor.
Ros entered the job with a wave of silence which was broken with the unveiling of Workie the auto-enrolment giant gonk who shouldn’t be ignored. While auto-enrolment will continue Workie may well be forgotten by all that saw it.
Ros has to address the issue of the new State Pension from April 2016. I am sure everyone by now knows that those that reach State Pension Age (SPA) from 6 April will be entitled to a State Pension under the new rules; this was previously called the superfluously-named single-tier pension. Contracting out finally ends and with it goes S2P.
The new State Pension on paper is relatively straightforward. The issue is the next 40-odd years of complication as an old system, much changed and tinkered with, collides with the new world. A whole raft of lucky winners and unlucky losers are being recognised. Steve was perhaps lucky that it was far enough in the distance that he wasn’t being pressured to explain how it will work in too much detail. However, 4 months out, there is clamour for clarity and the detail is coming but is deeply confusing even for experienced pensions experts, let alone Joseph and Josephine H Public.
Add to this the Women Against State Pension Inequality Campaign (WASPI), which has mounted a concerted campaign to raise the issue of the rise in SPA for women born in the early 1950s, for whom it increased from 60 to 65 (legislated in 1995) and then subsequently to 66 (following legislation in 2011); this resulted in the situation where a woman 5 years from SPA would impact with little or (and being generous) no clear communication from government. For comparison, the 1995 changes had a 15 year gap to the SPA of those affected. They would appear to have a very strong moral case that unless you were lucky, or a pensions professional, these changes could easily have passed you by.
These women have lost out, and while they acknowledge the SPA has to rise it is the pace of the double rise and the apparent lack of communication that is at the core of their complaint. This has left Ros (personally sympathetic to the cause and an advocate when the legislation was introduced) in a difficult position: balancing clear personal opinion, the constraints of her professional brief and a lack of political experience have made this appear a very difficult conversation to have. The rare occasion of poacher turned game keeper has made this a hard issue to cope with. Ros is a keen user of Twitter to engage with the general public, but she appears to have reached an impasse believing her hands are tied. However, Parliament is there to legislate and laws can be made and amended and it is possible to imagine a short term solution to compensate these women for their lost expected income. How Ros deals with this may become the determining factor of her tenure.
The ongoing pensions freedoms have also not been beyond Ros’ attention in recent weeks, with her blaming providers and trustees for the lack of Pension Wise engagement. From a Trustee perspective (Trustees being my main clients) I find this difficult to swallow. I am well aware of the lengths we went to ensure that communications sign-posting members to Pension Wise were up and running before the freedoms went live, and I have had many planning meetings with Trustees who take their duty to communicate effectively with their members very seriously. The issue with Pension Wise was first caused by the application of the purdah rules which took the adverts off air and the ridiculous short term view of the freedoms (votes) which meant the whole project was introduced too quickly. This kind of criticism does not sit well with me and sounds too much like excuses are needed to justify the poor uptake.
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