When will Government interference in pension provision stop?!
Last week we learned that Pensions Minister Steve Webb has unveiled a “string of new ideas” for private sector workplace schemes.
This borne out of the fact that there are fewer than 2m private sector workers who are accruing defined benefits inside their pension schemes.
I wonder if politicians generally, and Steve Webb in particular, ever ask themselves the six million dollar question “Wasn’t it our constant tinkering that has got us in this mess in the first place?”
The answer for these hard of understanding individuals is “Yes, it is our fault!”
Take a look at the myriad of legislation introduced by consecutive Governments (of all political persuasions) throughout the 70s, 80s and 90s and you will see the root cause of a decline of a pensions system that was probably the best in Northern Europe into something that chaos.
Forcing employers to reduce the level of overfunded schemes and taxing dividend income on UK shares inside pension schemes has combined to strip tens of billions of pounds out of pension funds.
Only politicians could deliver through something labelled “pensions simplification” something that isn’t simple.
The constant process of changing the rules around contributions, benefits and retirement ages has caused the typical UK citizen to wonder why they should bother at all.
Politicians like Webb are quick to claim that the pensions industry is “not fit for purpose” but slow to even begin to think that they have been the cause of the problem.
One of the “string of new ideas” is a proposal to allow defined benefits schemes to remove future accrual of widows pensions I assume he means widowers as well.
At a stroke he reduces the tremendous financial security that such benefits can bring to the bereaved spouse. Brilliant!
Here is a great idea for the Pensions Minister – stop interfering!!
And now for a more practical idea; in the same way that the interest rate mechanism in the economy is controlled by a body independent from Government (The Bank of England) do the same with pensions.
Create an independent pensions commission to deal with all aspects of private, employer and State pensions and I nominate Dr. Ros Altman as the first Chairman with one simple mandate – take back, on behalf of the UK citizen, the political football that is pensions.
