There can’t be many people who genuinely believe any government has set out to systematically undermine UK workplace pension provision. But you could be forgiven for thinking politicians are genetically programmed to indulge in well intentioned tinkering, with irredeemably baleful consequences.
Today’s survey from Punter Southall provides a fairly stark picture of the malaise into which the once vaunted UK pension system has descended. One in four employers report staff cutting or suspending pension contributions, only one in twenty still offer defined benefit schemes to new employees, and there is a rising tide of resentment against the pernicious impact of government actions. While nearly nine out of ten respondents anticipate a change of government in the forthcoming general election, only 13% think this would be a good thing, and a whacking 57% think it would make little or no difference.
A popular idea which emerges from the Punter Southall study, as well as from a broad range of other pensions commentators, is to take politics out of pensions. If the pensions industry craves one thing, it is a stable long term regulatory environment in which to get its act together. Politicians who win power have a range of priorities, but by far the most important is to get re-elected within the next five years. As we all know, even a week is a long time in politics, but five years is barely a blink of the eye in the glacial world of pensions.
Given this asymmetry between the time horizons of the pensions industry and the ministers whose decisions shape it, or mis-shape it, perhaps the Pensions Commission might serve as a useful template for the way forward. Chaired by Lord Turner, the Commission’s 2005 analysis and recommendations achieved the unusual feat of attracting support from across the pensions community and, broadly speaking, across the political spectrum. Maybe a similar body, made up of representatives from the various stakeholder groups, and freed from the straightjacket of political short termism, could come up with sensible, practical and effective ideas for reform of the pensions system. Maybe along these lines, in fact?