Industry picks holes in pension reform bill

The second reading of the Pension Schemes Bill on Tuesday (2 September) saw Mr Webb tout the successes of the coalition’s programme, particularly taking credit for the auto-enrolment “revolution” under his watch.

This came much to the chagrin of Anne Begg, chairman of the Work and Pensions Committee, who accused him of rewriting history over the success of the policy that the previous Labour government had fostered.

The two did however agree on the need for a single pensions regulator, something of a u-turn for Mr Webb.

“I have to say, the experience of the last 12 months has made me more sympathetic to the view that the eventual destination might well be a single regulator,” he told the House of Commons, with Ms Begg stating that it is something her committee has called for on several occasions.

“There is absolutely no doubt that if we go ahead with defined ambition and collective schemes then it will be imperative people know who will be responsible for which part of pensions. I know it’s incredibly complex, but people need to know who to complain to,” she added.

This chimed with persistent calls from the wider pensions industry for a solution to the overlap between the Financial Conduct Authority’s personal pension remit and The Pensions Regulator’s occupational scheme oversight.

Malcolm McLean, senior consultant at Barnett Waddingham warned that the big increases in defined contribution pensions brought in by auto-enrolment will mean that the current regulatory split will become more and more unbalanced and unsustainable over time.

He added that an appropriate for the change might be in 2018, when the auto-enrolment staging programme is complete.

Charges and transfers targeted

The knives were out later in the week, as a variety of pensions experts gathered for a Westminster Employment Forum conference on the future of pensions regulation, reserving particular criticism for the DWP’s pot follows member and charge cap policies.

Helen Forrest, head of policy and advocacy for the National Association of Pension Funds, called for a “serious rethink” of the government’s approach, which raised “stark inconsistencies”, while Age UK head of public policy Jane Vass said the government needs to have a bigger overall look at the issue.

These comments were from the more moderate side of the panel, while those deemed by Richard Graham, chairman of the All-Party Parliamentary Group on Pensions, as the “Guy Fawkes of pensions”, cut rather deeper.

The man most intent on burning down government policy was Michael Johnson, research fellow at the Centre for Policy Studies, who admitted that he was generally a fan of pensions minister Steve Webb’s reign, but “he has lost the plot with pot follows member”.

Gina Miller, founding partner at SCM Private and founder of the True and Fair Campaign, trained her ire at costs and charges, stating that the 0.75 per cent cap on defined contribution scheme charges will not work as they only applies to DC and do not include all costs.

Annuities under scrutiny

While auto-enrolment has seen 4m new pension savers at one end, the Budget proposals have opened up a can of worms at the other end.

Shadow minister for pensions Gregg McClymont was quick to stick the boot in, taking issue with the “tension between two polls of policy” of people being defaulted into auto-enrolment, but no longer defaulted into an annuity.

The latest research showed the number of people between the ages of 51 and 59 buying annuities could drop by 3.3m, meaning about £77bn will shift into annuity alternatives like income drawdown and the withdrawal of tax-free lump sums.

However, it’s not all doom and gloom for the squeezed annuity providers, as those potentially losing their jobs can now apply for a job giving the government’s promised at-retirement guidance.

Michelle Cracknell, The Pensions Advisory Service’s chief executive, said it has already received several applications from recently unemployed former annuity provider employees, which could create a “virtuous circle”.

Aye, naw or mebbe

With the Scottish independence referendum now less than two weeks away, the rhetoric is reaching saturation levels, no more so than in the financial services industry. At time of writing, our CPD guide to the issue has received 22 comments, which have predictably become divided down nationalistic lines.

I was born and raised in Edinburgh, but come from almost exclusively English stock and now live in London, which makes me by no means unique, but does give me more stake than some.

I retain a certain amount of pride and patriotism, believing that against all odds Scotland would eventually succeed as an independent country. But given my proximity to the practicabilities of the financial side, my fear is that a release from Westminster’s shackles would bring with it many serious problems.

In the last few months, FTAdviser has reported on the concerns of Scottish advisers, the potential for mortgage cost increases, the danger of a credit rating downgrade, and the impact independence would have on the influential Scottish finance sector.

These issues may or may not be insurmountable, but along with European Union membership and the currency, they remain unanswered questions. Obviously certainty on these points is not possible until the nation decides one way or the other, and I know many of my friends north of the border favour braving the unknown over settling for the status quo, but I can’t help feel that breaking up the union is more trouble than it’s worth.

One thing’s for certain though, with some pollsters predicting a turnout over 85 per cent, at least this vote has reinvigorated political debate in the country.