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Posted on: 12/09/16
Read our special edition of TechTalk: Changing Opportunities. This edition of Techtalk has a collection of eight article topics to help you in meeting your clients' needs in this changing marketplace.
Patrick Leavey, our Senior Public Affairs Manager, provides us with his insight into the future pension legislative landscape in light of recent Government appointments. And Pete Glancy, our Head of Industry Development, considers why triennial re-enrolment should trigger wider reviews of workplace pension solutions.
On a stifling hot summer night you might be tempted to sit up and watch re-runs of old debates or election campaigns on the BBC Parliament channel. Speaking from personal experience you might also feel a little self-conscious about admitting this to work colleagues.
The leadership debates from the 2015 general election are particularly thought-provoking. Of the seven party leaders who battled it out on television, only two now remain in post: the leaders of the SNP and Plaid Cymru. Politicians and policy makers in Westminster have experienced a period of extraordinary change over the last year and a half. As a result it might seem an impossible task to predict how the Government's pension policy might change in the next few years. In any fluid situation, however, we can still identify pieces of information which allow us to develop a sense of the dynamics at play, to start to build up a picture of the different options, to analyse and evaluate those options, and then to develop our response. So what are these pieces of information we need to reflect on? Both Theresa May and Philip Hammond come to their respective roles with considerable knowledge of pension policy. While she has focused exclusively on home affairs issues for the last six years, Theresa May was the Shadow Secretary of State for Work & Pensions from 2009 until the general election in May 2010. She wrote a paper on pensions for a think-tank and made numerous interventions in the Chamber of the House of Commons. In the paper, and in her speeches on the subject over that period, she emphasises again and again the importance of developing a culture of saving in the UK. The new Prime Minister is also surrounding herself with people who have a strong understanding of the pensions and savings landscape. She has asked the Corporate Affairs Director of L&G, John Godfrey, to lead her Policy Unit. (The Policy Unit is a central team within No.10 which develops policies requiring interdepartmental coordination, or which are of particular interest to the Prime Minister.) In addition Mrs May's new Chief of Staff, Nick Timothy, used to work at the ABI. Our new Chancellor, Philip Hammond, was also Shadow Secretary of State for Work & Pensions, from 2005 to 2007. It is clear from speeches he made at the time that he has thought hard about the problem the UK faces in encouraging its citizens to save for retirement; that he has already spent some time examining pension tax relief; and that he has an impressive grasp of technical detail. For me, these are all signs that retirement savings may play an important role in the policy priorities of the new Government. Deficit reduction will still be a core focus for Mr Hammond and the Treasury. One of George Osborne's last announcements in Government was the abandonment of the fiscal rule which dictated that Government finances should be in surplus by 2020. This was a significant development. However, the Treasury will still need to find additional ways to raise revenue, and reduce its expenditure. It is worth remembering that the net cost to the Exchequer of pensions tax relief is approximately £21 billion a year, and Treasury officials have developed a deep understanding of saving incentives as a result of the consultation last year. As Mr Hammond has ruled out an Emergency Budget, we will have to wait until the Autumn Statement, which will occur on 23rd November, for an indication of any significant fiscal changes. His next opportunity for signalling any policy reform will be at the 2017 Budget in March next year. The capacity of the Opposition to effectively scrutinise any proposed changes to pension policy is weak. There is currently no Shadow Pensions Minister, and when one is finally appointed he or she will be the fourth person to hold that role in 18 months. This is not a solid foundation for the effective scrutiny of any proposed changes to pension policy. The Government will not go unchallenged, however, as there is considerable expertise in both the House of Lords and the Select Committee led by Frank Field. All of these reflections make me think that UK pensions policy will not be exempt from more change. Some things, however, remain constant. The Scottish Widows Retirement Report, which was published last year, indicated that only 56% of the UK's population is saving adequately for retirement. The proportions of women and the self-employed saving adequately are even worse. This remains a critical long-term challenge for the country, and it is not going away.
Insight into the future pension legislative landscape, in light of the post Referendum Government appointments.
Read the full, special edition TechTalk here: