Do politics and pensions mix?
If you missed the Government’s White Paper on pensions last week, don’t worry – you are not alone. It drew little attention beyond the pensions industry trade media, and reaction was hardly euphoric.
The Government’s own focus was short-term and political, with a post-Carillion/BHS emphasis on the threat of criminal proceedings, or even custodial sentences, for bosses proven to have deliberately neglected their companies’ pension funds.
Like so much previous pensions legislation, these proposals evoke the sound of bolting horses and stable doors being slammed. Well intentioned, and generally right, but too late. In this case, too late to save the pensions of thousands of workers at the likes of Carillion or BHS.
Just as the 1995 Pensions Act would have prevented the Maxwell scandal – but for the fact that it had already happened.
Just as the 2004 Pensions Act would have provided compensation for thousands of workers whose employers went bust leaving an empty pension pot – but for the fact that it had already happened.
There’s nothing intrinsically wrong with this legislation – just a sense of frustration that it addresses yesterday’s problems, not tomorrow’s. Question is, could these problems have been foreseen, and action taken earlier to prevent them?
The answer may be “maybe”.
All of the above were proposed by people in the pensions industry before the Government acted -sometimes long before. Pensions have inherently long term horizons, often extending decades into the future, while politicians – however well-intentioned – are naturally focussed on the next election.
So is there a case for an independent pensions commission to propose and advise on legislation? Comprising the great and the good of the industry, with the insight to identify potential problems before they escalate, and devise long term remedies, it would also be unencumbered by the short-term imperatives of politicians looking for quick fixes.