As both centre-left and centre-right political think tanks agree on the need for a pensions commission, Gregg McClymont says this could provide a refreshed model for future pensions policy.
The UK has comprehensively reversed its downward trend in workplace pension saving. Automatic enrolment (AE) has increased the number of people saving for retirement by around ten million, and the policy has exceeded most people's expectations. Many workers are on track for a better retirement as a result. Of course, there is a lot more work to do.
Lord Adair Turner's pensions commission, which reported in 2005, was integral to the cross-party consensus underpinning AE. This consensus has proved remarkably durable: it has survived the financial crisis, multiple general elections, and national convulsions over Brexit. The question is whether this consensus can be renewed in order to make sure AE reaches its full potential.
While we will likely never in the UK enjoy Swedish-like levels of consensus, whereby no major pensions changes are made without explicit cross-party agreement, the advantages of policy stability are crystal clear in AE's success so far.
The previous commission was able to take a complex policy area, analyse it with deep seriousness, and more unusually still deliver conclusions that became commonly accepted common sense. How did it do it?
It achieved this through two clever tactics. Firstly, it prepared the ground for its conclusions by generating consensus over the facts in its interim report. And it reinforced this with the quality of evidence and analysis supporting its recommendations in the final report. Second, the commissioners brought together employers, consumer advocates, and trade unionists through the lifetime of the commission so that it developed the same shared understanding of the problems and, eventually the solutions.
The million-dollar question is whether that sort of success was a fluke, a one-off, the product of a peculiarly propitious set of political circumstances and a uniquely talented trio of commissioners. Given that pensions policy is intrinsically a long-term business, can we reproduce the success of the commission in order to solve the pensions challenges we are faced with now and maintain the UK's pensions system in a healthy state?
The People's Pension has recently sponsored an in-depth expert study of the case for a new pensions commission by The Fabian Society and Bright Blue, centre-left and centre-right think tanks respectively. The report reveals strong cross-party and front-bench support for the policy.
The report - Framing The Future, A new pensions commission - calls initially for a one-off independent review of pensions policy modelled on the 2003-2005 Turner commission, followed by the commission's transformation into a permanent scrutiny body like the Office for Budget Responsibility (OBR).
While we have got another ten million people saving, contribution rates are still too low to provide most people with an adequate retirement. Likewise pensions freedoms have ended the unpopular and possibly inefficient practice of mass individual annuitisation at age 65; but so far a durable retirement income solution for defined contribution retirees until death has not emerged. Questions like these will need hard thinking and long-term answers.
Some may argue a technocratic commission, that sits apart from elected politics is out of keeping with our times. Not just because of the large majority enjoyed by the new government, but because of increasing public scepticism about expertise. Hasn't Britain had enough of experts?
I hope not. Policy challenges like pensions need consensus, detailed analysis and long-term decision making. A new pensions commission, carefully designed, with clear objectives, and the right personnel both in the front office and back could make a genuine contribution. A new pensions commission could provide a refreshed model for the long-term formulation of pensions policy. Without in any way interfering with the right of our elected representatives to exercise the final judgement. That's the goal - agreement on the facts, on the long-term challenges and the trade-offs.
Gregg McClymont is director of policy at The People's Pension
The Pensions Regulator (TPR) has said it will continue with its “clear, quick and tough” approach to driving up standards across the pensions industry following the coronavirus pandemic.
Gemma Willingham and Tom McNaughton look at how trustees can respond to increasingly-used data subject access requests.
Work and Pensions Committee (WPC) chairman Stephen Timms will table an amendment to the Pension Schemes Bill to allow schemes to pause transfers when a scam is suspected.
The Department for Work and Pensions (DWP) has launched a review to assess the effectiveness of costs, charges and transparency measures in protecting pension member outcomes.
The Pensions Ombudsman (TPO) has ordered a former owner of Norton Motorcycles to pay back £14m of pension fund monies that he had invested in the struggling sponsor.