Four key reforms matter above all the other policy initiatives currently being floated in the pensions arena, says Michael Johnson, research fellow at the Centre for Policy Studies.
Simplification of state pension and the abolition of contracting out, completing the indexation switch from RPI to CPI, public sector pensions reform and a successful launch of Nest are the four areas that government will focus on, says Johnson, who ran David Cameron’s Economic Competitiveness Policy Group before the election and who has advised the Treasury on pension tax policy.
Speaking at the Friends Life Global Forum this week Johnson said simplification of the state pension is the top priority, with some in government considering the policy, which could be perceived as a near 50 per cent increase in pension, as so attractive that it should have been saved until nearer the next election date.
But he said a key benefit of the change would be the abolition of contracting out, with most of the £9.1bn of contracted-out rebates going to public sector employers.
Johnson said: “Simplification of state pension is the top priority. People in government think the government may have peaked too early by releasing it now. Telling people that they are going to almost double their pension could have been a vote winner – there are those in government who would have rather the policy hadn’t come out until later in the political cycle.”