FORGET the headlines and the short-term noise. When it comes to our finances the really meaningful developments often pass below the mainstream radar.
Last week was all about banking reform, yet another example of long-grass politics in which the really meaty recommendations are about to be sidelined.
Yet the past two weeks have also brought news of two changes that could bring real benefits to many of us in the long run.
The first was an amendment tabled by Labour that will help those signing up to their employer’s pension scheme through automatic enrolment get the best deal for their savings.
Of some 1.6 million private sector employees in Scotland, almost eight in ten are eligible for automatic enrolment, which kicked off last October. Over the coming year, tens of thousands of Scots in medium-sized companies will be signed up to their company schemes, many consequently saving for the first time. Fears that large numbers would exercise their right to opt-out are so far unrealised, with just one in ten doing so of those already enrolled.
As the main piece on this page underlines, however, converting those savings into a retirement income can be the hardest part. Many lose out on thousands of pounds by failing to explore their options.
The amendment to the Pensions Bill, tabled by shadow pensions minister Gregg McClymont, requires employers to direct those automatically enrolled into their work schemes into annuity brokerage services at retirement.
It’s a simple proposal with the potential to help millions of people get more for their money, provided it also supports those for whom annuities aren’t the best solution.
That was followed last week by the government’s decision to scrap rules restricting the amount that people can save into the National Employment Savings Trust, the pension scheme launched to support auto-enrolment. The change will also allow existing pensions to be transferred into the scheme. Some pension firms are strongly against the decision, arguing that it amounts to an unfair competitive advantage.
That’s tough, frankly. The main issue I have with the move is that it doesn’t take effect until 2017. But like McClymont’s amendment, the ultimate beneficiaries will be the millions saving into a pension for the first time. Which, I’m sure you’ll agree, is how it should be.