Steve Webb MP is no more. The Liberal Democrat front-bencher who, as a result of 2010’s hung Parliament became the UK’s longest-serving pensions minister, was one of close to 50 parliamentarians from the junior coalition party to lose his seat in Thursday’s general election. In a surprise to everyone, including the Conservatives led by David Cameron, the incumbent prime minister won a majority after months of polls suggesting no party would have control of the House of Commons. The pensions industry now faces the reality of a new minister, maybe one with less of a grasp of the subject matter.
On the other hand, the person charged with bedding in the pensions freedoms unveiled by George Osborne last year may be an all too familiar face: Ros Altmann. Altmann, a former director general of Saga Group, is already well known to the outgoing government for her work as Business Champion for Older Workers, recently drafting a report that suggested a minister should be put in charge of extending working lives.
While the notion of a dedicated minister for older people was rejected by Cameron, who argued during the campaign that the concerns of the UK’s ageing population should be on the mind of all within the Cabinet, it was announced a few weeks ago that Altmann would join the House of Lords if the Conservatives won a majority.
Altmann’s peerage would see her join the UK’s unelected upper house in charge of financial consumer protection and financial education, the party said, with a review of pension product charges and the development of Pensions Wise, the body offering guidance to those confounded by their new ability to draw their pension pot down from age 55.
Whether Altmann’s new position means she’d join the Department for Work & Pensions as de-facto successor to Webb, or straddle the Treasury and Department for Business, Innovation and Skills – in charge of annuities, pension taxation and consumer protection, respectively – will become clearer as Cameron announces his new Cabinet in the coming days.
For those that have been calling for greater transparency of fees, note that Altmann has told a UK newspaper she is in favour of a “pounds and pence” approach to fee disclosure, a view championed by the Investment Association, formerly the IMA.
While on the face of it a common-sense approach, those saving small sums may well be left under the impression they are being charged reasonable amounts when in fact the percentage of contributions deducted would undermine their future savings goals.
Regardless of Altmann’s approach, the end of Webb’s tenure in Parliament is likely to see the end of his focus on defined ambition and greater risk-sharing in pensions. The recent budget freedoms, based solely around a saver’s ability to withdraw his pension pot at his convenience, run counter to the collective approach pursued in the Pensions Scheme Act 2015 that allowed for the launch of a collective DC model in the UK.
Gone is the focus on improving the outcome for a cohort as a whole – such as by introducing Independent Governance Committees to oversee insurance-based contract arrangements – replaced by a need to ensure individuals have the ability to understand the costs associated with each pension product, rather than pooling risk at retirement.
In short, the UK should expect to see a shift to a traditional Conservative view of individualism and free markets, with an overtone of consumer protection as it now affects a part of the population key to future electoral victories. But those hoping for a quiet revolution that could have seen the UK emulate the European system of solidarity will be disappointed by Webb’s departure and the failure of Gregg McClymont’s Labour party to form the next government.