Pensions insight
Politics? I give up
Henry Tapper, founder of Pension PlayPen, relates how politics muddles pensions
W hen I write my blog, it’s read that day (and never again). Topicality is everything. But when writing for a periodical such as Professional in Payroll, Pensions and Reward I need to be more measured. It is very hard to write about politics and be measured. The Finance Act 2017 was the first casualty of the ‘snap election’. Months of considered thought on matters that impact us was wiped by the ‘wash-up’ which is the process that metaphorically pours any undebated policies down the drain. We cannot even say ’the 2017 election’; instead, better perhaps to say the ‘first 2017 election’ for we are as like as not have another one in the autumn. Meanwhile, all those hard conversations we could have had, had the Tories got a proper majority, have been put in the ‘for tomorrow’ cupboard. What chance a bold and resolute game-plan to tackle the gig-economy? What about reform of pension tax-relief which has been on HM Revenue & Customs’ (HMRC’s) to-do list since the first budget of 2015? To make sense of this turmoil I’ve been looking back at how all this started. At 11a.m. on Tuesday 18 April I shook hands with Richard Harrington, pensions minister, and began a meeting that discussed how small businesses could in future measure how effectively their workplace pensions were working. The meeting was interrupted by the minister’s phone vibrating with calls from colleagues. To his credit Richard put pensions before politics and went on to meet John Cridland, to discuss his work on the state pension age. Richard became the first parliamentary under-secretary for pensions in July last year; previously, the role carried a senior ministership. The demotion of the role was no slur on Harrington but a reflection of the
reduced influence the DWP has in pension policy. It is likely that Ros Altmann will have been the last full minister with the pensions brief, with Steve Webb the last member of parliament to hold the senior role. ...pension and payroll don’t seem to matter much to politicians It is a useful reminder to those who work on the automatic enrolment (AE) project that the critical decisions on pension taxation, the indexation of the state pension and the schedule for phasing AE contributions are subject to Treasury approval. The business of pensions regulation and governance is transferring from The Pensions Regulator (TPR) to the Financial Conduct Authority (FCA). Increasingly, the former’s role is limited to managing compliance of AE and protecting the pension protection fund from failing defined benefit schemes. My discussion with Richard focussed on FCA initiatives – independent governance and the pensions dashboards. The FCA has also assumed control of the costs and charges initiative which is crucial to the value for money scoring which its intended employers and members can use to benchmark their workplace pension. Richard asked me if I was in favour of merging TPR and FCA. I replied that the FCA would not merge but acquire; despite disapproving looks from civil servants in the room, he smiled knowingly. So, what can we learn from the weeks of political upheaval? Well, I’m learning not to expect longevity of tenure among ministers; indeed, Guy Opperman MP
has been appointed to the post of parliamentary under-secretary for pensions and financial inclusion. I’m also learning that for solutions to our issues on workplace pensions, we should be spending more time with the Treasury and its regulator, the FCA. Though the DWP has currently several open consultations – including its triennial review of AE, the critical decisions for employers and their payrolls will be taken by the holy trinity of the Treasury, HMRC and FCA. While I can see an argument for workplace pensions being regulated by the FCA, I fear the loss of influence from the DWP on pensions policy. Defined benefits pensions, as distinct from pension freedoms, are deferred pay; workplace pensions are – like the DWP – suffering an identity crisis. We need to be clearer what we mean by ‘workplace pensions’, who has the governmental remit for them and where accountability for outcomes properly lies. Let’s hope that Guy Opperman can sort this out. What you will not know is whether David Gauke, who will be the new pension minister’s boss, will last any longer than Damian Green, who took the DWP top job less than a year before he moved on. Or indeed, whether Guy the current pension minister will be given any more of a chance than the last one. This infernal confusion of politics is justified because of Brexit. But we will still be paid – whether in or out of the European Union. We’ll still be drawing on our pension or our pension fund whether the Brexit is soft or hard. In truth, politics matters a lot to pension and payroll but pension and payroll don’t seem to matter much to politicians. n
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Issue 32 | July/August 2017
| Professional in Payroll, Pensions and Reward |
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