Ros Altmann’s departure as the UK’s pensions minister after little more than a year heralds the return of instability for the industry, predicts Jonathan Williams
After six years of relative stability, the UK pensions industry faces upheaval, following the departure of pensions minister Ros Altmann.
Vacating her post on 15 July, days after Theresa May succeeded David Cameron as prime minister, Altmann promised she would continue to offer her opinions on all matters pension and long-term savings, albeit now as a backbencher in the House of Lords, the UK’s upper house .
Her elevation to Baroness, the only way for her to be named pensions minister last May, will significantly boost her already substantial profile as self-styled consumer champion and allow her to hold future governments to account when she sees a short-term pensions agenda emerging.
While not universally liked during her time in government, Altmann at least understood her portfolio and succeeded in winning support for needed reform of the UK master trust market to better protect the savings of those compelled to save through auto-enrolment .
In common with her predecessor Steve Webb, who enjoyed an unprecedented five years as pensions minister, Altmann was a minister able to field questions from the industry while appearing at events. And while she was not always able to answer due to the constraints of political life, she could at least not be thrown by a query about an obscure and long-forgotten piece of law.
Her departure, which she said came after a year of pressure to focus on “short-term” political concerns ahead of big-picture pension reform, brings to an end six years of ministers skilled in their brief and could herald the return of new pensions ministers once a year.
When Webb was initially named minister, it was often wryly observed that he would not return to the then-National Association of Pension Funds’ next annual conference, as there had been seven pensions ministers between 2001 and 2010.
Altmann’s departure, and the appointment of Richard Harrington , could signal the return of the pensions minister portfolio as a staging ground for politicians eager to prove themselves on a technical beat rather than a portfolio where hard work and good policy can significantly improve the life chances of future generations.
Altmann seems keen to see her past role vanish entirely, with responsibility for pensions policy formally moving to the Treasury.
She shared her thoughts on social media following her departure, saying she had argued for such a transfer only a week ago.
I suggested to Gov last year & last week to move Private Pensions to Treasury in a new Pensions+Long-term Savings brief. Is that happening?— Ros Altmann (@rosaltmann) July 18, 2016
The Treasury has, arguably, long been responsible for pensions policy, with Webb and the Pensions Regulator believed to have only been informed of the sweeping pensions freedoms reforms of 2013’s Budget shortly before they were unveiled .
While the importance of pensions is without doubt, questions remain over the regard in which the government holds the industry in light of Altmann’s departure, and the fact Harrington is only an under-secretary, the most junior of ministerial ranks.
It is questionable whether a shift to the Treasury would solve the problem, as the pensions-freedoms reform appear to have been designed with the sole purpose of allowing savers to draw down pension pots earlier than expected – triggering a tax windfall. The Treasury has therefore proven its desire is only for the short-term gain rather than the long-term prosperity of the sector.
Altmann’s call to take private pensions away from the Department for Work and Pensions should, therefore, be heeded and instead see the creation of a standalone ministry solely in charge of long-term care and savings, as she and Webb have previously championed .
Such a senior minister could then be responsible for laying out a long-term vision for reform, championing auto-enrolment and fending off any attempts to water down company staging dates, or increases to contribution rates, as the UK suffers the likely inevitable economic shock from its decision to leave the European Union.