We have just seen the rapid appointment of a new Prime Minister and her Cabinet. Have a look at Geoff’s August bulletin regarding his views on the financial world after the Brexit Referendum. In the meantime, the post Brexit world has got me thinking about politics in general and the effect that politics has on pension policy in the UK in particular. This article highlights four notable recent Ministerial incumbents with responsibility for pensions to illustrate this point.
He was Minister of Welfare Reform in Tony Blair’s government (1997 to 1998). He didn’t stay in that position very long because he is one of the few politicians who actually understands the demographics of the State Pension Scheme in this country. He was very vocal in trying to get through to the then Government that the State Pension Scheme is unsustainable in its current form and it was not until a further 10 years that legislation was passed to bring in the new Flat Rate State Pension for those retiring after April 2016, and Auto-Enrolment, both of which will for future generations reduce State dependence and encourage private Pension planning for the young.
At committee level he is now very much involved in the BHS Pensions debacle and it has got personal between him and Phillip Green. It is not for me to comment on this at the moment, but suffice to say that Mr Field has a reputation of being a Rottweiler in the pensions’ world.
He served for much of the coalition’s time in office as the Pensions Minister. He was instrumental in pushing forward the Pensions Freedoms we have now. It was a very clever move by the Government at the time as the reforms were sold as a positive by the spin doctors to the extent that people were told they could blow their pension on whatever they wanted to (Lamborghinis being one example). This has of course potential to be a stinging tax regime for some, whereby if you did you could be increasing the Chancellor’s wallet with up to 45% of your Pension Fund.
Having been made redundant from politics, he is now gainfully employed with a well-established pensions’ provider. This does say something about his knowledge of the industry and it was a sad loss to the world of pensions when he left politics.
We had high hopes that he would carry on the good work that Steve Webb left behind, but a week in politics is a very long time and we now have a new incumbent (Damien Green). Apart from Steve Webb’s tenure, we have not had consistency in personnel in that department. This has not led to ‘joined up’ pension planning for the future.
We found in her a Minister with great experience in the economics of pensions and that was her downfall. She is now again roaming free to put her opinion across outside the political arena.
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Politicians are always making changes to pensions’ legislation, sometimes from an angle of political necessity and sometimes from a financial perspective. And sometimes they get it right too. What this does mean, however, is that pension planning can be complicated and difficult to understand. Contact us or call us on 0121 693 0690 for an initial chat if you need some helpful, expert advice.