Pensions are a very long-term investment. Structural decisions about state and private provision should reflect the need to plan long-term and create stability within the system.
Interesting then, that ministerial posts to oversee pensions are so short lived. Individuals appointed to head up the nation’s strategy for pensions have a turnover which compares to professional football managers. What does this suggest about the relative importance the Government places on helping UK citizens save for a decent income in retirement?
Our pensions system is hugely important to the wellbeing of millions of workers and the employment created within the UK financial services sector. Pensions are also highly complex, which in large part is attributed to laws, regulations and guidance handed down by successive governments.
The key roles are the Secretary of State for Work and Pensions and the Pensions Minister. In these two posts, there have been no less than 16 reshuffles since 1997. The current Secretary of State, James Purnell was appointed in January 2008, whilst Rosie Winterton, the tenth Pensions Minister in eleven years, took up her new role in October.
Most successful private sector businesses believe leadership continuity is crucial to achieving longterm results. But reshuffles are very much a feature of British politics, which means that this is clearly not a view shared by politicians – even though UK pensions (state and private) are worth trillions of pounds.
The timing of the move of former Pensions Minister Mike O’Brien last month was particularly interesting given the importance of the 2008 Pensions Bill to the development of personal pensions and other major state pension reforms. Furthermore, Paul Myners, Chairman of the Personal Accounts Delivery Authority (PADA), was also moved. He was recently appointed by Gordon Brown to take up a key post within the Treasury in the aftermath of the global banking crisis. His resignation as chairman comes as the PADA embarks on the crucial phase of procuring services.
This could jeopardize the success of personal accounts and that could be the final straw in damaging consumer confidence, at a time when we need to persuade all employees to take personal responsibility and start saving for retirement. What do the public make of transient political figures that drift in, and drift out of these vital roles within a few months? Many believe that those in public sector gold-plated pension schemes do not appreciate the worries and needs of ordinary folk when it comes to pensions.
The pensions industry works diligently to engage with each new incumbent. But do the Secretary of State for Work and Pensions and Pensions Minister actually have a major influence on future policy? Or is it the senior civil servants who hold the power on strategy? So much change at ministerial level does suggest that the civil servants must be the main source of continuity.
Sadly, it is hard to envisage a change to the status quo on ministerial appointments. The pensions industry must continue to do its utmost to engage with each new appointment, but must also identify and engage with the civil servants and government advisers supporting them, to develop appropriate solutions for those who need to save for retirement.