Between the lines: May adopts too conservative an approach to pensions detail

Published on Wednesday 30 September 2009 21:53

A FEW hours after Gordon Brown came out fighting in Brighton, shadow work and pensions secretary Theresa May was in Edinburgh outlining the pensions crisis facing the next government.

But whereas Brown's desperation compelled him to produce an unusually policy-heavy conference address, May was content to stick to platitudes and steer clear of specifics.

She dutifully catalogued the many pensions challenges the next administration faces – from the ageing population and the lack of faith in the system to the demise of final salary schemes and inadequate savings levels, she ticked most of the pensions crisis boxes.

Most of her speech could have been written at any time in the past year or two, give or take a brief reference to last week's amendment to the personal accounts implementation programme.

But indications as to how she will tackle the crisis, assuming she takes the work and pensions helm next summer, were less forthcoming. Her reticence was entirely in keeping with the Conservatives' approach to seizing power.

However, this being an event focusing on the future of pensions (courtesy of Turcan Connell), there was an appetite for more detail. Few present will have taken anything away from May's speech that they could chew on as they contemplated the daunting challenge of tackling the pensions crisis.

Instead, it fell to Friends Provident chief executive Trevor Matthews to provide the substance. He seized on the government's decision to delay the full implementation of personal accounts by presenting an industry take on addressing the workplace pensions problem.

Matthews is big on a holistic view of retirement saving that sees the faults in the traditional pensions model, preferring instead to view retirement as a process rather than an event. Instead, he suggested, the different strands of retirement planning, including defined contribution schemes but also comprising Isas, company share plans and other components, should be brought together in the workplace. Matthew has ample reason to promote this scenario, with his company developing corporate technology that could give employees a simple overview of their pension plans.

He pointed to the economies of scale that could be achieved by giving employees access to everything they needed to take control of their pension plans, from valuations and projections to online educational tools and scenario outlines.

He believes that such a platform would allow companies to better attract and retain workers while encouraging greater employer engagement with pensions.

As ever, there are counter arguments to this vision. Chiefly, does giving people more control and responsibility encourage greater engagement? Some would argue that years of moving towards this approach has only proved the merits of compulsion. And this takes us back to personal accounts.

The delay until 2016 before companies have to contribute the full 3 per cent to personal accounts is a victory for the firms that clamoured for it, but it leaves the government's great plans for an affordable workplace pension framework in tatters. The people that were supposed to benefit from pensions reform will now be the ones that lose out. The government bottled it when it finally claimed to have the stomach for the radical reforms required. Do the Tories have anything better to offer, or will they look to the pensions industry to lead the way?

SO NOW we know what it takes for the Financial Services Authority to draw the last line in the sand. It has instructed lenders to reopen 185,000 previously rejected complaints about the sale of protection insurance (PPI).

It turns out that lenders reject on average 60 per cent of the PPI-related complaints they receive. But when those complaints are then taken to the ombudsman, some 80 per cent are upheld in the customer's favour.

The arrogance of those lenders who continue to reject valid complaints from ripped-off customers even after warnings and enforcement actions from the FSA is astonishing. The ban on the sale of PPI alongside the loan or mortgage the product is designed to cover comes in next October, but there's a strong argument for bringing that forward once the appeal against it is dismissed, as it surely will be.