The industry says Ros Altmann has big shoes to fill in succeeding Steve Webb as pensions minister, Natasha Browne hears
The revelation that Ros Altmann was the new parliament's pensions minister came as quite a shock to the industry.
Just hours before Downing Street made the announcement, Twitter was alive with speculation that it would be the former government's financial secretary to the Treasury David Gauke.
Some papers even carried reports that Altmann had said she would reject the post if she had been offered it by Prime Minister David Cameron, but the media guesswork proved false.
Pension pundits welcomed Altmann – who was the last government's ‘older workers champion' – to the position with enthusiasm and were especially pleased with her wealth of pensions knowledge.
Barnett Waddingham senior consultant Malcolm McLean summed up the mood when he said: "Steve Webb was always going to be a difficult act to follow and it is good that we are going to have a new minister well versed in pensions and not someone, as happened several times prior to Mr Webb's appointment, with little or no knowledge of the subject."
Still, questions have been raised about how she will cope with the switch from 'consumer champion' – a term some industry professionals balk at – to government official.
There are also critics who have disputed her merit as a consumer champion given her extensive experience in financial services, which include former roles at Rothschild Asset Management, NatWest Investment Management and Chase Manhattan.
But one organisation pleased with her track record is the Pensions Action Group, which campaigned for compensation for scheme members whose sponsors had collapsed. Member Terry Monk says: "We are delighted to see Ros appointed as minister for pensions.
"The determination Ros showed when leading our campaign clearly demonstrated her support for the members of the pensions scheme affected and how well she understands what needs to be done in the best interests of everyone's eventual retirement pension."
The path to pensions minister
Altmann's journey to pensions minister was unorthodox given that she is not an elected MP. The first hint that she could take the role emerged last month when the Tories revealed she would be nominated as a Conservative peer if the party won the general election.
And the party took a narrow majority of the seats on 7 May, paving the way for Altmann to become minister for consumer protection, as previously promised.
Under this remit, she was expected to widen the scope of Pension wise to provide guidance to working people of all ages, and to consider charge caps for pension products.
But uncertainty now lingers over whether these will come to fruition as the role of minister for consumer protection appears to have dropped off the government's radar.
Still, Towers Watson senior consultant Will Aitken says it was a good idea to appoint someone who knows the brief. But he adds: "What's less clear is whether she knows politics.
"Ros Altmann has always been outspoken and it's going to be fascinating to see how much she has to curb her views in order to respect collective responsibility.
"For instance, she's been an outspoken critic of the lifetime allowance (LTA) for defined contribution (DC) and has said it should be abolished – will she be able to keep her own counsel if the tax it raises is deemed more important?"
In the Budget 2015, Chancellor George Osborne revealed the LTA would be slashed by £250,000 to £1m from next year. But on her personal blog, Altmann said the allowance should be scrapped.
She wrote: "For members of DB pension schemes, who do not have an actual pot of money but are promised a specific level of pension, perhaps the lifetime limit makes more sense, since they have no control over the investments and the contributions are harder to measure due to fluctuations that occur depending on the scheme's assessed funding levels.
"With defined contribution schemes, the better policy would be to control the amount put in each year but then allow the pot to grow as well as it can, without penalising it if it rises strongly."
Fidelity Worldwide Investments retirement expert Alan Higham points out that Steve Webb came to office with a number of views that conflicted with the government's vision for pensions. For example, Webb argued against the freezing of state pensions for people who retired abroad.
Higham says: "He was constantly hit about the head with that statement when he became minister and concluded in the round there just wasn't the money available to fix that.
"It wasn't that he disagreed with himself; it's just when it came to it in government, you can't achieve everything you might want to achieve and you have to make compromises.
"I think for Ros, the good thing is she's very experienced in pensions. She brings a lot of knowledge to bear. And I hope that everybody gives her a fair chance and understands that there will be a limited amount of policies relative to the number of things she may have talked about in the past that can be practically achieved."
Welcomed into the Department for Work and Pensions (DWP) on 14 May - where she joined returning Secretary of State for Work and Pensions Iain Duncan Smith - Altmann outlined her key priorities for pensions. These were the new flat rate state pension, auto-enrolment (AE), and safeguarding of the freedom and choice reforms.
She said: "For many years it has been my ambition to make pensions work better for everyone and improve people's later-life incomes. Up to now, that has been as an independent policy expert. I am delighted to now have the opportunity to make a difference from within government.
"As our population ages, it is more important than ever to help, encourage and empower people to plan and prepare for their later years.
"My priorities are clear: to strengthen British pensions, improve later life incomes, and protect the pensioners of today and tomorrow."
But what issues does the industry think Altmann is set to come up against? PTL managing director Richard Butcher says they are the same as those Webb or Gauke would have faced.
He adds: "We need a long-term, stable pension system. She must seek a political consensus. She must resist tinkering, even if she thinks it is for the good as trust in the system will emerge from stability.
"And, she must resist the Treasury's attempts to restructure and/or restrict pension tax reliefs – pension saving is not a Treasury piggy bank. Huge damage could be done if she fails in this respect."
Stephenson Harwood partner Mark Catchpole says: "Managing the pension flexibilities in practice will be a challenge, and responding to any challenge that presents because essentially we're in a new territory and you don't know how it's going to work out in practice.
"You might need to respond quite quickly if things seem to be not working out as people had anticipated."
Aitken adds: "The main pensions challenge will be not getting embroiled in detail - let the regulators regulate and focus on the biggest pictures.
"By 2017 AE will be off to a great start. But it is only a start. It'll need careful planning and consensus building to take it from there to the next stage so that we once again have a pension system to be proud of. That planning needs to start now.
"The main political challenge will be ensuring that pensions (and savings) aren't seen as a tax honeypot."
Now Pensions chief executive Morten Nilsson outlines six key areas of focus. These are the removal of qualifying earnings for AE; ensuring low earners can access AE; establishing cross-party consensus on automatic transfers; giving consideration to auto escalation; extending flexibility to younger generations, and making sure the current AE timetable stays on schedule.
He says: "Ros Altmann has some big shoes to fill but she is one of the most recognisable voices in pensions. It is critical that she engages well with the industry and that she can help push through the many initiatives launched by Steve Webb that still need a lot of work and consideration to be delivered successfully.
"The outgoing administration under Steve Webb played a key role in the revolution of Britain's pension system, helping to push through major policy reforms in the state pension, implementing Osborne's pensions freedom policy, and of course the introduction of auto enrolment.
"However, there are a number of pressing issues that need to feature on Ros Altmann's to-do list as the new pensions minister in order to ensure savers are able to adequately fund their retirement."
With the exception of Steve Webb, most pension ministers have not stayed in post for long. Only time will tell whether Altman follows the same pattern. But Catchpole says: "She's not like your average career politician or minister that gets rotated on a regular basis; she's there to do a particular job. And she's been appointed because of her particular skillset.
"It's not likely that she's going to be rotated in the same way as other ministerial posts are. And so I suspect that, presuming that she does a good job, she'll stay in post."
Aitken adds: "Pensions should be about the long term and so policies are more important than personalities. Very few of us remember the string of pension ministers that preceded Steve Webb, but they laid the ground work for auto-enrolment - which extended pension saving for millions of people.
"What are her policies going to be?"
Brief career history
- Described as an ‘independent expert on later life issues’ on her personal blog
- Counts pensions policy, investment, savings, annuities, retirement and social care funding as her areas of expertise
- Began her career as an academic at University College London, London School of Economics and at Harvard University
- Head of international equities at Chase Manhattan Bank, as well as a board director for NatWest Investment Management and Rothschild Asset Management, between 1984 and 1993
- Consultant on institutional investment for the Treasury’s Myners Review between 1999 and 2000
- Policy adviser covering investment, asset allocation and member communication at the Number 10 Policy Unit between 2001 and 2005
- Director-general of over-50s specialist Saga Group between 2010 and 2013
- Has chaired the Investment Board for the Lord Chancellor since April 2014
Honours and awards
- Awarded Commander of the Order of the British Empire (CBE) Honour in recognition of services to pensioners and pension provision in July 2014
- Top 50 Most Influential People in UK Pensions, 2013
- Top 5 Pensions Tweeters, 2013
- Women in Public Life Award, 2011
- Honorary Doctorate of Letters from Westminster University Business School, 2010
- Professional Pensions 'Pensions Personality of the Year', 2007 and 2008
- Sunday Telegraph 'Hero of the Year', 2007
- The Sun 'Business Personality of the Year', 2007
- The Times 'Business Big Shot', 2007
Professional Pensions is delighted to confirm the Women in Pensions Awards 2020 will be presented at a virtual ceremony on 25 November.
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