What can we expect from pensions policy after Theresa May's reshuffle?
In the wake of the Brexit vote, the government has been radically overhauled. Two former pensions ministers tell James Phillips how this affects pension policy.
- Junior role less influential in creating policy
- Inexperience means smaller chance of radical changes
- Impending bills unlikely to be further delayed
The pensions world has welcomed a new Secretary of State for Work and Pensions and has also seen Baroness Ros Altmann resign as pensions minister.
But Altmann's departure has seen the pensions portfolio seemingly shrink, with the role downgraded to under-secretary of state, and Richard Harrington taking up the post.
The Department for Work and Pensions (DWP) has confusingly announced Harrington's brief will be the same as Altmann's, and that he will be referred to as minister for pensions, but his official position will be under-secretary, a rank below that of minister of state.
In an early statement, Harrington confirmed he would continue Altmann's work across state and private pensions.
He said: "I'm delighted to take responsibility for this important ministerial post and I look forward to tackling the full range of state and private pension matters, including the new Pensions Bill and automatic enrolment."
But what does the ministerial downgrade mean for the future of pensions?
Harder to liaise
Altmann believes the move of the pension brief to a more junior role could make it harder to negotiate pension policy with the Treasury - and says the new unequal footing may reduce cooperation.
Altmann says: "It's clear the role is significantly more junior than the minister in the Treasury you would be dealing with."
She explains: "I had a very good working relationship with the Treasury minister and, given private pensions is split between two departments, it is quite important to be able to liaise on equal terms. It may be politically that's not quite how it will be.
"I was trying to work on helping the industry promote pensions, standardise the forms that people send out, and get wake-up letters sent at age 50. All of those things I would have had an input in, but I'm not sure my successor will."
But Royal London director of policy Steve Webb, who was pensions minister from 2010 to 2015 says it was hard to command respect even as a minister of state.
He says: "The Treasury, quite frankly, does not pay a lot of respect to secretaries of state at other departments. But they certainly don't to junior ministers. In terms of the bargaining power of the DWP with the Treasury, Harrington is going to have a mountain to climb."
Continuity most likely
Webb believes Harrington's relative inexperience will only lead to the continuation of previous policy, at least for the meantime. - noting that, while Harrington gets to grips with the roles and his responsibilities, DWP civil servants will continue to work on policies set by Stephen Crabb and Ros Altmann.
He says: "What tends to happen when you have someone coming in who doesn't necessarily have a background in the subject, is the civil service become quite important because they're the continuity and expertise. They will drive the agenda forward. By and large, that means continuity not change, and the civil service keeps things moving in the direction they were already going unless told otherwise."
Altmann agrees, but also voices concern Harrington is not experienced enough for the pensions brief.
She says: "You would have hoped the minister leading pension policy would themselves understand pensions to know how best to help the public. It's a huge change. But the officials are still there, but sometimes the officials get things wrong. It is quite important to have an idea of what pensions are actually all about.
"A lack of understanding and long-term vision is a huge threat to pensions. Pensions are always a short-term political football and, for the last few years, we had been trying to get away from that. But if you just want to pretend you've sorted pensions out, you can do that in the short term, and store up long-term problems for a future government."
No immediate threat
There is no apparent immediate threat to UK pensions, but both Altmann and Webb are concerned that future work could be derailed due to other government priorities, such as Brexit.
In fact, regulations changing the cap on Pension Protection Fund (PPF) payments have already been delayed - they were due to be laid before Parliament this week, but this is now not expected to happen until after the summer recess.
Altmann says: "I don't know if anything is at threat. We need to look at all the areas of pensions and work out how we can help the pension revolution stay on the rails."
Webb agrees, arguing, impending pension changes are unlikely to be delayed further or cancelled.
He says: "The Pensions Bill is pretty small and pretty technical - it's tidying up Pension Wise and clamping down on questionable master trusts, which needs doing. You wouldn't want to delay that because you don't want people auto-enrolled into unsuitable schemes.
"And because the Lifetime Savings Bill has been announced and is potentially quite a popular thing, I'd be surprised if it were pulled. Government will want to be doing something, rather than leaving the EU and cutting public spending."
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