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Politics-free pensions policy would stop gov’t tinkering

Politics-free pensions policy would stop gov’t tinkering

We are currently enjoying an unusual period of agreement among politicians regarding pensions, but, as another election looms, some worry the consensus could disappear.

Some of this is due to coalition government, but also the fact that some of its policies build on work done by the previous Labour government.

Although shadow pensions minister Gregg McClymont has criticised government plans to speed up rises to the state pension age and has called for tougher reform of the private sector, he has been broadly supportive of initiatives he can claim were Labour ideas all along, and set in motion by the previous government: auto-enrolment and state pension reform.

Will we see Labour become more radical as we approach the 2015 election? Indeed, will we see the Conservatives produce their own polices in opposition to incumbent pensions minister, and Lib Dem, Steve Webb?

Jargonfree Benefits chief executive and pensions expert Steve Bee says: ‘Auto-enrolment has cross-party support, put in place by [former prime minister Gordon] Brown’s Labour government, and ratified and implemented by the Conservatives and Liberal Democrats. I don’t see that changing. But constant change to pensions will not stop either.

‘Our current politicians, as good as they are, will not stop tinkering with the system. If you are putting money away for 50, 60 or 70 years, you want a good idea that the fundamentals of tax relief are not going to be here today and gone tomorrow.’

Independent pensions commission

Change is the one consistent feature of pensions policy. Since 2010 there has been a great deal of reform. If the three main parties begin once more battling each other over pensions, the rate and direction of change could become much more damaging.

Before the last election in 2010 there were calls for pensions policy to be devolved from politics, on the basis that people’s willingness to save is always undermined by changes to the savings system.

Such a commission could set its own policy direction, while still being accountable to policymakers, in a similar way to handing over the setting of interest rates to the Bank of England in 1997.

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