Julian Knight: Pension minister's plan is a flight to fairyland
Sunday 25 November 2012
'Too clever by half" is a peculiarly British phrase, summing up our long-standing national mistrust of the intellectual. We laud our Isambard Kingdom Brunels and warriors while the French adore their existentialists and pint-sized painters.
On this basis, I think they'd love our current Pensions Minister Steve Webb in the salons of Paris. For starters he's a professor, recognised as one of the coalition's biggest brains – up there with David "Two Brains" Willetts no less – and takes a very academic approach to his role, carefully weighing up evidence and inviting lots of discussion.
All well and good, and he has been, to date, light years ahead of some of the dullards who passed for pensions ministers under Labour. But in Parisian salon style, Mr Webb is also away with the fairies and I don't mean the green variety. Last week we saw the fruits of his latest burst of intellectualism, his discussion paper on the future of workplace pensions.
The centre piece is Mr Webb's idea for so-called defined ambition pensions. In short, what the prof would like firms to do is to move to a new type of workplace pension which would see risks shared between the employer and employee and be less dependent on the ups and downs of the stock market and interest rates.
In advance of the report, Mr Webb has been travelling the country meeting – in the dire language of modern government – stakeholders, getting them onside. According to officials, several big companies are interested in pursuing the defined ambition route for staff and I'm sure over time some may dabble.
There are lots of lovely platitudes directed at Mr Webb's defined ambition idea – you know the sort of thing: "a welcome addition to the debate", "interesting suggestions that merit further discussion".
In private though, these same people tell me defined ambition is "cloud cuckoo land stuff" and that Mr Webb is indeed "away with the fairies".
Defined ambition could have worked a decade ago when we still had a private-sector final salary pension system (defined ambition could be applied to the public sector but there seems no appetite from Mr Webb for that) and firms were looking for lower-cost less risky alternatives, but we are way beyond that time now.
Overwhelmingly firms have moved to defined contribution where the risks rest wholly on the employee. With the International Monetary Fund reckoning the UK economy will struggle to grow at more than 1.5-2 per cent a year over the long term, are firms really going to move back to a pension system where their risks and costs are upped once again?
What's more, the nature of employment is changing. I have a phrase "we are all freelance now" and we seem to be moving away from standard modes of employment with people more likely to become self-employed or take on contract work. In such a world employers still need to make a contribution to pensions of course, but it won't be through Mr Webb's complex defined ambition model.
He would do better looking at how to get more workers using the schemes they have. Auto enrolment is here for some and will arrive for all soon, but we need to get people genuinely interested in their pensions. This can only be done by letting them access their money when they want and making tax relief simpler and fairer (I would abolish higher rate tax relief on pension contributions and use the cash to boost the basic rate).
Mr Webb, who made a good start to his job as Pensions Minister, needs to forget dreaming his dreams and look at getting what we have now to work better. In the case of defined ambition, Professor Webb has proved too clever by half.
- 1 What happens to your body when you give up sugar?
- 2 Have sex with your iPad thanks to the new sex toy no-one asked for
- 3 The 'sex selfie stick' lets you FaceTime the inside of a vagina
- 4 Why you're almost certainly more like your father than your mother
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
Nigel Farage promises Ukip will not 'stigmatise' would-be migrants – and says he wants 'everyone to speak the same language'
Ex-head of MI6: 'We shouldn't kid ourselves that Russia is on a path to democracy'
Most people think legal tax avoidance is just as wrong as illegal tax evasion, poll suggests
iJobs Money & Business
£8 per hour: Recruitment Genius: This Pension Specialist was established early...
£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads