A stable policy environment (Jonathan Stapleton, Professional Pensions)

The new government has acted fast on pensions. Indeed it has already announced it will bring forward a Pensions and Savings Bill to restore the link between earnings and the state pension, legislate for the phasing out of the default retirement age and set a timetable for raising the state pension age, depending on the outcome of a review.

In addition, an Equitable Life Payments Scheme Bill will secure compensation for nearly a million policyholders hit by the near collapse of the insurer Equitable Life and a Postal Services Bill will seek to address problems at the Royal Mail – including its £10bn scheme deficit.

As well as this, the government has also promised to simplify the rules and regulations which have hindered occupational pensions in the past; pledged to encourage companies to “offer high-quality pensions to all employees”; and said it would support auto-enrolment.

The coalition will also look at giving people greater flexibility in accessing part of their personal pension fund early and scrap the age-75 rule.

Yet, for all this flurry of activity and promises, the real priority of the new government when it comes to occupational pension schemes should remain the same – to have some stability in terms of policy.

Too often over the past 13 years have pension policies been made on the hoof, without consideration of the wider impact these decisions will have.

The new government needs to look hard at its pensions policies and make sure they help, rather than hinder, occupational schemes – and are set out in a joined-up way with both the DWP and the Treasury working together on any new rules or regulations.

It isn’t hard to think of times when such a joined up policy hasn’t happened – the proposed restriction on higher rate tax-relief on scheme contributions for those earning over £130,000, being but one example.

These proposals are completely counter to the tax simplification rules, introduced on A-Day in April 2006 – and could have, with a little lateral thinking, been amended to achieve a similar result without the negative consequences.

Yet, while the coalition needs to make sure it has some stability in terms of pension policy it also needs to ensure stability in its pensions team.

Since 1997, there have been 16 ministerial pairings – 10 secretaries of state and 12 pension ministers – leading the formation of pensions policy.

Indeed, in the last five years alone, we have had six secretaries of state (David Blunkett, John Hutton, Peter Hain, James Purnell, Yvette Cooper and Iain Duncan Smith) and six pensions ministers (Stephen Timms, James Purnell, Mike O'Brien, Rosie Winterton, Angela Eagle and Steve Webb).

Such a revolving ministerial door at the department of work and pension leads to a lack of understanding and continuity with regards to pensions policy – and certainly will not help ministers understand the industry’s problems better.

Should the new coalition government achieve this stability of both policies and personnel, it would certainly mark a major step forward for the occupational pensions industry.

(Jonathan Stapleton, Editor Professional Pensions)

http://twitter.com/jonstapleton and jonathan.stapleton@incisivemedia.com