She is one of the UK’s most recognisable pensions campaigners, perhaps most famously for her work on behalf of 140,000 Allied Steel and Wire employees, as well as with her most recent position as director-general of Saga.
Here, Ros Altmann reflects on a long career in finance and, in particular, where the pensions industry is headed.
I don’t intend to retire, at least in the conventional way.I would expect at some point I’ll cut back on the hours, but I can’t imagine never doing any work.
I’ve done academic study of pensions, economic study of pensions then the management of pension funds. I understand the social policy issues as well as the investment policy issues. It would help a lot of policymakers to have a broader background.
If auto-enrolment is designed to revive a savings culture and ensure more people are saving, it will fail. If it is designed to increase the number of people putting any money at all into a pension product, it will succeed. The problem is we need to be doing the former and auto-enrolment is all about the latter.
The other fear is that companies will level down towards the minimum contribution. We’ve already seen signs from some employers who have said because of the costs of auto-enrolment, they will devalue the pensions they were previously offering.
The ‘pension’ product is not suitable for a large number of workers. It may not be that the best thing for them to do with their money is to lock it away and be unable to touch it even if they want or need it.
Pensions are just one very inflexible financial product. People are saving in something equally socially useful, like buying a house or paying back student debt, but the fact they are choosing to save is not recognised by policy. They won’t get an employer contribution unless they are putting the money into this one product.
The decumulation process is fundamentally flawed and works against the pensions saver. Far too many people make this one-off irreversible decision with no advice, no understanding of what they are doing and make the wrong decision but will never be able to change it. And nothing in policy protects them.
The best way to engage young people with pensions is to get rid of the word ‘pension’. This is actually just savings, and if we were to call the private element of later life saving something else and call what you get from the state the ‘pension’ that would become clearer.
Steve Webb is really great news as pensions minister but is being hamstrung by industry lobbying. I think he would like to make pensions more flexible and would like to lift the restrictions on Nest but I don’t think he’s being tough enough in terms of pushing through some of the policies that I know he believes in from when he was in opposition.