Here’s your starter for ten, as Bamber Gasgoigne used to say. "How many pensions ministers has the Government had in 2008 ?
Answer – Four. Peter Haines (previously Northern Ireland minister, must have walked under a ladder or something), James Purnell (the only one with any pensions experience), Mike O’Brien and now Rosie Winterton (ex Department of Transport).
As football teams like Manchester United, Arsenal and Liverpool have found, it does help to have some consistency at the helm, long term results tend to follow. Government pension strategy is in danger of becoming the Newcastle United in this analogy, destined never to deliver because of a lack of long term strategic thinking.
So what has this revolving door policy delivered in 2008 ? Here are a few highlights;
Personal accounts
– After a six month consultation the Personal Accounts Delivery Authority (PADA) has delivered the following gem relating to the personal account charging structure. “There is no clear consensus from the industry on whether to adopt an annual management charge, a joining fee plus a contribution charge or an AMC plus a contribution charge”. One step forward.....
The DWP announced in February it would be launching a study into the impact of means-tested pension benefits on personal accounts. I would imagine they will get started fairly soon. Still, there's been a lot on.
The DWP made a couple of concessions - allowing employers to keep their own contribution calculations where they contribute an equivalent or greater sum into a workplace pension than personal accounts, and allowing employers to self-certify that their pension scheme meets the qualifying test for exemption. But the general consensus was that these proposals did not go far enough and would still lead to widespread leveling down, with lower earners losing out. Sound familiar ?
The Government’s own figures revealed that people with less than 20 years until retirement in 2012 on salaries of up to £25,000 will see negligible benefits from personal accounts.
Regulation - The FSA found that providers were falling short of the mark on Open Market Option standards for annuities. Nearly 40 per cent (What ?) of their consumer correspondence failed to meet regulatory requirements. Simple question, How can that be allowed to happen, it’s a simple enough letter. If you are one of the companies not delivering in this area, here's a tip, borrow one from one of the competent companies, it’s a standard letter.
Pension Industry
- The ABI said it would bring annuity transfer times down to 30 days under a new initiative between providers and e-commerce standards body Origo. This is a simple matter of efficent administration that really shoudn't even take 30 days, but anyone who has ever tried transferring a pension from, for example, Windsor Life, will be betting on hell freezing over first. Surely a simple matter for the regulator to sort out (bit like Open market options really).
A Good thing
- The Government helped women and carers out by allowing them to buy an additional six years of voluntary National Insurance Contributions to help boost the state pension.
A Bad thing
- Chancellor Alistair Darling raised eyebrows (geddit ?) in the pre-Budget Report when he decided to freeze the pension lifetime allowance at £1.8m from 2010 to 2015/16. That wasn’t what Gordon said, was it ?
End of term summary
– Could do better…..but probably won’t. Nothing much has changed, if you want a decent income in retirement you’ll have to fund it yourself.
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