Collapsing scenery in and around Downing Street has sparked fear in the pensions industry, as the resignation of pensions minister Guy Opperman brings important reforms to a halt.
Opperman announced his resignation on the morning of July 7, becoming the 51st MP to quit their government role in protest at prime minister Boris Johnson’s leadership.
In his resignation letter, Opperman spoke of his pride at the reforms he stewarded during his five-year tenure as pensions minister, including the Pension Schemes Act 2021.
He added there was “much more reform I would have liked to have done,” but that he had been compelled to step down and asked for the prime minister to follow suit.
A number of further reforms were indeed planned, and several are in relatively late stages of development, such as regulations for the new defined benefit funding code, auto-enrolment expansion, the single code of practice, and the Pensions Regulator's notifiable events regime. But the future of these reforms is now in doubt, as ministerial resignations have brought things to a standstill.
An industry dismayed
Reaction from across the industry was characterised by alarm and dismay, and warnings that, unless order is quickly restored, further delays to important pension reforms could cause significant damage.
Former pensions minister and LCP partner Steve Webb, with whom Opperman feuded, nonetheless praised the “stability” the now-former minister brought to the role, arguing that he “deserves credit for taking things forward in key areas”.
“But there is a huge agenda of unfinished business,” he added, arguing that “we have made no progress on automatic enrolment in the last five years, policy on superfunds remains in limbo, and too many errors in state pension payments are still unresolved”.
Every day delayed puts the smooth implementation of the dashboard in jeopardy.Kate Smith, Aegon“The next minister will certainly have a full in-tray and will need a strategy to deal with the Treasury obstruction which has held up progress in pensions policy for so long".
The future of the Treasury’s role in important pension reforms has likewise become highly uncertain. Former chancellor Rishi Sunak was one of the first to resign in a bid to oust the prime minister, while Nadhim Zahawi, who was chosen to replace him, called for the prime minister to resign less than a day after accepting his new post.
Aegon head of pensions Kate Smith focused on dashboards, which face several important deadlines in the coming months.
“[Opperman] was personally leading a number of initiatives to improve pensions engagement including the pension dashboard and the pension engagement season,” she said.
She pointed out the awaited Department for Work and Pensions response to the pension dashboards consultation, "with final regulations any day and everything hangs off this, including the timetable for schemes to connect to dashboards".
"Every day delayed puts the smooth implementation of the dashboard in jeopardy.”
She added that the minister’s resignation “could also impact the next steps for auto-enrolment, including lowering the minimum age from 22 to 18 and basing minimum contributions from the first pound, as well as finding solutions for the self-employed”.
“Only this week, the pensions minister recommitted to implementing these in the mid-2020s, and suggested increasing the minimum contributions from 8 per cent to 12 per cent over time. All of this could now be in jeopardy.”
Hargreaves Lansdown senior pensions and retirement analyst Helen Morrissey seconded concerns about the future of auto-enrolment expansion, but also spoke of the need for the next pensions minister to get to grips with state pension underpayments.
“The DWP has also been under increasing pressure with widespread issues of people not receiving their state pension on time or being underpaid.
"Some underpayments run into many thousands of pounds and stretch over several years – they have caused huge financial hardship to people. Whoever succeeds Opperman will be under pressure to fix these issues fast,” she said.
Broadstone technical director David Brooks, meanwhile, expressed his fears that “the chaos in the Conservative party” would have wide-ranging policy repercussions.
“Funding code regulations plus single-code were expected to be laid before summer recess. These are long awaited and much needed.
"This political kerfuffle is sure to delay things together with the long lost notifiable events regime. I sincerely hope the government can sort themselves out quickly to get things back on track,” he stressed.
Benjamin Mercer is a Senior Reporter at Pensions Expert, FTAdviser's sister publication
