PensionsJun 16 2022

Pensions minister full of ideas but not much action

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Pensions minister full of ideas but not much action
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To begin with you not only have one master – the minister for work and pensions – but also HM Treasury, which ultimately means the chancellor.

It is the latter who holds all the power and the purse strings.

Look at two of the biggest policy reforms that pensions ministers have had to deal with in the past decade, namely the pension freedoms and the introduction of the new state pension, and they both originated in the Treasury.

The other frustration is that, by the nature of pensions, you are forever having to pick up the pieces and implement other people’s policies. Auto-enrolment was a policy introduced by Labour minister Peter Hain, though it was launched under Lib Dem Steve Webb in the coalition and has now been through the hands of at least three other ministers.

It is a miracle anything gets done given the regular turnover of pensions ministers in the past 25 years – Labour certainly never really took the position very seriously.

Last week the current incumbent Guy Opperman became our longest running pensions minister and will shortly hit the five-year mark.

While the previous record holder, Webb, had three of the most significant reforms of any generation to look after – the new state pension, auto-enrolment and the pension freedoms – Opperman has tried to make his own mark. His flagship policies are the dashboard, greener pensions, a mid-life MOT and the saving sidecar.

He has had grand ambitions and is a bundle of ideas but so far he has not delivered anything meaningful for savers.

Meanwhile, he has had to ensure that increasing auto-enrolment contribution rates to 8 per cent has not been matched by a decrease in participation rates. 

What is interesting about Opperman’s time in office is that his ambition to get things done has been hindered by what is increasingly looking like a big problem for the civil service: its technology.

The mess around the women’s state pension underpayment is caused by the legacy systems inside the DWP, where so many of the records for those who lost out were done manually, and are now being done manually again.

Opperman’s dream of a pension app that shows all your retirement savings in one place in a safe and secure manner is proving to be hampered again by the fact that it is not just only some legacy insurers who are struggling to feed in these records, but also government departments.

Issues such as being unable to pay tax-relief to low income workers in net pay pensions is also a tech issue caused by HMRC systems. 

The same applies to child benefit, where thousands of families have been chased for overpayments due to the poor systems at HMRC.

And so it will keep proving the case. Very soon systems at the DWP will grind to a standstill unless the tech improves, hampering any future pensions minister's attempts to get anything done.

So what will be Opperman’s legacy as minister? He has had grand ambitions and is a bundle of ideas but so far, other than promises on green investments in pensions that were unveiled at Cop26, he has not delivered anything meaningful for savers. It is all just a wish-list so far.

He will probably get more time in the job. But while the Treasury holds the purse strings, it will prove very hard to get anything done as pensions minister.

Equity and inheritance 

The problem with equity release is inheritance. I have not seen one equity release complaint in my time doing this job that did not involve a son or daughter distraught that what they thought they were going to inherit was actually far less.

It is largely always a communication problem about what the older relative planned to do with their home.

So is it time to formally put property on the retirement planning list? That is certainly what a report by the Lang Cat suggests. It argues that housing wealth could help combat the cost of living crisis.

And it makes a radical suggestion: scrap the £175,000 main residence IHT allowance. That way people will be more encouraged to use the roof over their heads.

What an interesting idea. It will never happen though, not with a generation of home-owning Tory-voting Brits to look after.

PR problems

Do PRs know when their clients are dodgy? Every week my inbox is bombarded with press releases from PR people touting the comments of tax firms (largely) pushing dubious schemes.

In one case a firm kept sending releases for an adviser that had been banned several times over.

I could not live with myself, but sometimes I think the PRs actually just do not know any better.

James Coney is money editor of the Times and Sunday Times