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17 / 01 / 2025
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What does the revolving door of Pensions Ministers mean for pensions policy?
By its very nature, pensions policy needs to be long-term and consistent in order to deliver. Unfortunately, governments are quite often much more short-termist in their thinking, driven predominantly by electoral cycles.
While there have been some notable successes – automatic enrolment (AE) being the main one – in recent years pensions policy appears to have hit the buffers and the high turnover of Pensions Ministers doesn’t help.
Every time a new Minister joins, there’s inevitably a ‘re-set’ with the new Minister wanting to understand priorities and assert their own direction.
This can result in existing activities being delayed or deferred, with new initiatives, that the Minister can claim as their own, coming to the fore.
For the pensions industry it’s frustrating. Just when you think one has got the hang of it, they move on.
There’s a huge amount that the previous government and the new Labour government have set in train for the pensions sector and having consistency is key to building momentum. We’ve got pensions dashboards, consolidation of DC mastertrusts, continued consolidation of LGPS, value for money, Mansion House reforms and the promise of a pensions review looking at adequacy.
On the DB side, we’re still awaiting the government’s response to the Options for DB Schemes consultation. This includes proposals to make it easier for surplus to be returned to sponsors and a potential new role for the Pension Protection Fund (PPF) as a public sector consolidator for DB.
The new Pensions Minister is Torsten Bell the former Chief Executive of the Resolution Foundation – a think tank focussed on improving outcomes for people on low and modest incomes.
He also served as Ed Miliband’s Director of Policy, and a Treasury Civil Servant and Special Adviser to Alastair Darling. He is a former trustee of the Child Poverty Action Group and a Fellow of the Academy of Social Sciences.
In 2022, UCL Policy Lab appointed Bell as an Honorary Professor, calling him “one of Britain’s most prominent commentators on economic policy”.
Bell’s credentials are well established and in a book he wrote that was published last summer – ‘Great Britain? How we get our future back’ he outlined a number of areas that he believes need to be reformed to improve outcomes for UK pension savers.
On consolidation, he wants to see the UK build up “a smaller number of far larger pension funds that have the means and the incentive to be active owners of corporate Britain”.
He is supportive too of consolidation in the local government pension schemes, mirroring Canadian and Dutch models, and of expanding the remit of the PPF.
He describes AE as “one of the biggest policy successes of recent decades” but states people are still not saving enough. He says that to build on the progress of the last decade, both employer and employee contribution rates should gradually both rise to six per cent.
This isn’t to say that everything he outlined in his book will become government pensions policy, but it certainly helps with understanding his starting point on key policy issues like consolidation and pensions adequacy.
The pensions brief isn’t always viewed by up and coming MPs as the most dynamic of roles. However, it’s likely that this is a job Bell will have been keen to do.
Let’s hope he has a chance to gain some real traction before they move him on.
If you’d like to know more about Brightwell, get in touch at: hello@brightwellpensions.com
