Speaking at The Investing and Saving Alliance’s Annual Retirement Conference earlier in March, Opperman told attendees that, were he at the Treasury or the Department of Health and Social Care, he would enjoy the support of think tanks that were “thinking the unthinkable”.
“We just don’t have that in pensions,” he said, and also suggested that a cabinet reshuffle may be in the offing.
“I wouldn’t say I’m on my own because I’ve got amazing civil servants. I’ve got an amazing team around me, but I’m always struck by how little input I get from industry as to what [it should] look like in five to 10 years’ time,” he added.
Opperman’s remarks went down badly with a number of the industry’s leading voices.
Aries Insight co-founder Ian Neale said: “If there is a lack of long-term vision it is on the part of politicians, whose horizon is no further away than the next election.
“We have a vision, Mr Opperman, even a dream, that one day personal ideology and pet projects will be set aside and politicians of all persuasions will work with pension professionals to build a future of which we can all be proud.”
Legislation causes delays
Opperman took the reins as pensions minister in June 2017.
In that time, he has overseen efforts to introduce pensions dashboards, legislate for the introduction of collective defined contribution schemes, and reform DC products to try and improve value for money.
The Pensions Dashboards Programme was set up in 2019, and the first schemes will begin to onboard members from April 2023.
The industry has, however, expressed concerns surrounding the workload generated by ‘find and view’ dashboards. Public sector schemes in particular are seen as most at risk of missing their onboarding date.
“It is well known that Mr Opperman is frustrated — as we all are — by the apparent slow progress of the pensions dashboards project. This does not bespeak a lack of long-term vision in the pensions industry,” Neale said.
Ian McQuade, chief executive of Muse Advisory, listed CDC, master trusts and consolidator vehicles as ideas that have come from the pensions industry.
“Whether you think CDC is a good idea or not, the industry has invested huge amounts of time and effort,” he said.
“The delay in getting it off the ground [is] as a result of the need for legislative change and getting the right regulatory regime and approvals in place.”
‘Don’t be shy’
Opperman told the Tisa conference that his department has “flagged dashboards, greater awareness, CDC, reform of [defined benefit] hopefully continuing as it goes. I’m a big fan of superfunds, obviously Solvency II may impact on that. But there’s a whole bunch of stuff that we’re trying to do to create alternative products in DB and DC”.
He added: “That I think is the direction that I’ve set very clearly, but there’s other things that other people are maybe coming up with [and] I’d love to know what they’ve got to say. Don’t be shy.”
David Brooks, technical director at Broadstone, divided the government’s main challenges between solving the legacy issue of DB pensions and encouraging more people to save into DC pensions.
Brooks said that it was advisers and the industry that are largely addressing DB issues, “or at least it was until more government initiatives in infrastructure and illiquid investments has (in part) caused the delay in TPR’s funding code, leaving schemes still in a state of stasis wondering how that coin will land”.
He also appealed for the government to clarify its thinking on DC, “as delaying the regulations to improve automatic enrolment and not committing on financial education to improve people’s understanding of finance, investment and risk is storing up more issues for the future”, he said.
Steven Cameron, public affairs director at Aegon, suggested that Opperman’s remarks could have been a deliberate ploy to incentivise the industry to “revisit previous ideas and come up with more to help shape an agenda for future decades”.
“One of the areas of greatest potential is revisiting the definition of regulated advice, and we’ve been working with Tisa to develop detailed thinking here,” he said.
“While any change here would be led by the Treasury and implemented by the [Financial Conduct Authority], there are case studies which we’ve shared with [the Department for Work and Pensions] showing the benefits of using personalised guidance alongside advice to support consolidation.
“Such guidance could also aid the future use of dashboards,” Cameron added.
DWP has ‘shut down debate’
Small pots and auto-enrolment reform, or perceived lack thereof, are two notable sources of frustration in the industry.
Former pensions minister Sir Steve Webb accused the DWP of having “sometimes shut down debate on big challenges like the proliferation of small pension pots, by ruling out legislative solutions, even when this might be the best answer”.
“Similarly, many of the best brains in the industry engaged with DWP’s own 2017 review of auto-enrolment and came up with a sensible and pragmatic roadmap for reform, and yet nearly five years later nothing has happened,” he said.
In 2017, a DWP consultation on auto-enrolment yielded suggestions including lowering the minimum age from 22 to 18 and removing the lower earnings limit, neither of which have yet been implemented.
There was, however, acknowledgement of the government’s successes under Opperman’s tenure.
Mark Ormston, director of propositions and corporate partnerships at Retirement Line, expressed some sympathy for Opperman, although he did not think his comments were a fair reflection of the industry as a whole.
“I can easily imagine how a large part of his role is taken up by hearing problems and issues rather than solutions and ideas,” he said.
The DWP declined to comment.
Alex Janiaud is deputy editor at FTAdviser's sister publication Pensions Expert
