James Moore: Is this a ray of light in the appalling mess of the British pension system?
Thursday 28 October 2010
Outlook So auto-enrolment into company pension schemes is here, although not immediately and there's a lot of phasing in to be done to get employers used to the idea. All the same, it is a pension reform idea with a dab more credibility than the carefully leaked, headline-grabbing figure of £140 for the basic state offering, which no one really believes will be affordable by the Coalition in this Parliament, if ever.
The idea actually originated in the last administration, but the Liberal Democrat MP Steve Webb deserves a lot of credit for the role he played in formulating the final plan.
Almost everyone who provided some sort reaction to it yesterday had a whinge or two, but moans were usually limited to bits and pieces around the edges. The basic idea that an employee will be automatically enrolled into a company pension plan and will have their contributions matched by employers is a thoroughly good one.
Small businesses have some cause to gripe (and they've done just that), not least because of the administrative burden they face, but the medicine could be made easier to swallow by looking at some of the other issues that cause the sector unnecessary grief. And prodding those state-owned banks a bit more about their lending.
But in general, this is an idea whose time has come. Pensions policy has descended into an unholy mess over more than two decades. It started with the creation of the personal pension by the last Tory administration, whose attempt to persuade people to opt out of, or not join, their employers' schemes led directly to the pension mis-selling scandal and a swathe of other problems.
Then came Gordon Brown's smash-and-grab raid on the coffers of private final salary schemes; this and various other ill-conceived rules and regulations hastened the break-up of a system of private pension provision that was once hailed as Europe's best.
Silly ideas like the "stakeholder" pension were trialled and much time was spent on voluminous reviews that consumed several forests of paper and whose real purpose, given the lack of attention paid to the conclusions they came up with, seemed to be securing knighthoods or other honours for the worthies who wrote them.
So are we finally about to enter the dawn of a new, sensible age when it comes to pensions? Don't bet on it. There are too many richly rewarded actuaries, consultants and salesmen with vested interests in keeping things sticky to allow that to happen. But at least this is a little bit of light in the darkness.
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