Pensioners in sports cars? They are not the only ones to gain from pension reforms

Parliamentary Business: Royal London has confirmed that it was a major beneficiary of the audacious overhaul of the system

Mark Leftly
Wednesday 19 August 2015 01:23 BST

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Louise Thomas

Louise Thomas


The much-lauded constituency link in our first-past-the-post is overly eulogised.

The Electoral Reform Society describes the link as “a vital part of British political life”, which will come as a surprise to those who cannot name or put a face to their MP. That claim will also bring knowing smiles to Conservative and Labour MPs who can secure more than 50 per cent of the vote off the back of a few leaflets in true blue and red-’til-dead seats in even a disastrous election.

Most MPs take their constituency roles seriously, but the help that they give to struggling and wronged constituents doesn’t guarantee success at the ballot box, as many of the fallen in May’s election will testify.

Democracy is a fickle beast and the braying mob has booted out good men and women on little more than a whim – or, in this year’s instance, on an electorally brilliant Tory claim (though upon analysis a shallow one) that Labour would inevitably forge a union-destroying, ultra left-wing coalition with the SNP if you didn’t vote for David Cameron. Nor, it seems, does it help if during your time in Parliament you have changed virtually the entire electorate’s life for the better.

The Liberal Democrat Steve Webb was one of the Coalition’s most successful and respected ministers, talked-up by his Conservative colleagues in government. Even Tories who weren’t Mr Webb’s, or the Liberal Democrats’, biggest fans admired our erstwhile pensions minister’s intelligence – the Oxford graduate was once a professor of social policy at the University of Bath.

Take our former colleague Julian Knight. The Independent on Sunday’s former money and property editor is now the Conservative MP for Solihull, having defeated another Liberal Democrat, Lorely Burt, in May.

Critical of some of Mr Webb’s more outlandish ideas, Mr Knight still wrote in 2012 that he was “recognised as one of the Coalition’s biggest brains” and was “light years ahead of the dullards who passed for pensions ministers under Labour”.

Mr Webb was kicked out of his Thornbury and Yate constituency in Gloucestershire after 18 years in the House of Commons as part of the Liberal Democrats’ punishment from its centre-left base for propping up the Conservatives. Mr Webb’s share of the vote crashed by 14 per cent, wiping out a 7,116 majority to let in the Conservative Luke Hall.

While his fellow vanquished have struggled to find jobs – one excellent former minister recently asked if I could keep an eye out for work that would suit him – Mr Webb has landed himself the plum job of director of policy and external communications at Royal London, starting November. Although he is barred from any direct lobbying of the Government for two years under parliamentary rules, he will, Royal London says, “act as a key spokesperson for the group”.

Royal London is the country’s biggest mutual life, pensions and investment company with around 5.3 million policyholders. Yesterday, the group confirmed that it was a major beneficiary of Mr Webb’s breathtakingly audacious overhaul of the pensions system, smashing the £3bn barrier in new life and pensions business in just six months – an increase of 35 per cent on the first-half of 2014.

Mr Webb masterminded the pension freedoms that were announced in last year’s Budget and then came into force in April. Savers aged 55 or over are now free to take the whole of their pension pot as a lump sump, rather than accept the bulk of it as an annuity paid until they die.

This drew some criticisms that savers could end up wasting money they had saved for their old age, but Mr Webb encapsulated the public’s more excited mood, saying he was “relaxed” about how people spent their cash. As far as he was concerned, people should have the freedom to use what is, after all, their money “to get a Lamborghini”.

Coupled with the introduction of auto-enrolment, which has forced all employers to put eligible staff into a pension scheme unless those individuals opt out, Mr Webb has carved himself a slice of history from the unlikely position of pensions minister.

Workers in their teens and twenties are forced to think about their pensions in a way previous generations never did, while savers are able to transform their lives with a good chunk of money at a relatively young age.

Not only that, but Royal London has demonstrated that the City will be boosted by sales of pension products. Bolstered by what Phil Loney, the group’s chief executive, describes as having “virtually no exposure to the annuity market”, Royal London’s individual pensions were up 56 per cent to a shade under £950m and group pensions by 9 per cent to £1.155bn.

Mr Webb was clearly a significant prize for Royal London. My only worry, if I were in Mr Loney’s shoes, would be that if Mr Webb could not convince his constituents of his considerable, headline-grabbing achievements, can he be an effective spokesman on pensions policy for Royal London?

Even if he isn’t, though, Mr Webb has surely earned a role with a company that is now benefiting from his reforms. To its credit, Royal London has proved far more grateful to Mr Webb than the good people of Thornbury and Yate.

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