I read the news today…
I spent the weekend and this morning reading about pensions in the papers, not just the words, but what was in the lines between them too. Today’s the day that the Pensions Bill gets its second reading in the House and it looks from comments in this morning’s FT1 that the Conservatives have decided not to vote against it. That’s not particularly surprising or unexpected, I know, it’s not even disappointing, but it’s interesting that Chris Grayling, the Conservative Shadow Secretary of State for Work and Pensions, said when asked to comment on the Bill, “we will reserve our position”.
To me that says that although today’s vote will just be another staging post passed through in the journey for Personal Accounts a rockier road may lay ahead. After the Pensions Bill gets its second reading today the next stage in the journey will be the formation of a cross-party committee that will have the job of conducting a line-by-line scrutiny of the Bill. That could happen sometime around Easter I guess, depending on Parliamentary priorities.
There are many more pressing issues on the political front line than pensions at the moment; nuclear energy, incapacity benefit coverage and the urgent need to build millions of new houses are three of those for sure. Indeed, it seems to me that pensions reform is looking less and less like a 2010 election issue all the time, particularly as it seems more and more likely that the 2012 launch of Personal Accounts will be watered down or even delayed (or both) (BeeLine - What’s in a name?).
But it was interesting, I think, that Chris Grayling gave a strong indication of what reserving his party’s position might mean when he said that the Bill retains a “structural flaw” because of means-testing and the risk that one in five people could be no better off or even worse off by saving. I thought it was highly significant that Mike O’Brien, the current Pensions Minister, conceded in his comments to the FT that “there is an issue here” when referring to the means-test point, but that there is “no easy answer”. The minister went on to say that although he agrees there is an issue he doesn’t see it as being as significant as the opposition parties and others do.
Well, I have to say I thought that was highly significant. A year or so ago, when we were in the middle of a long-running argument with the then ministerial team on the means-testing issue during the ‘Battle of the Blogs’ (Battle of the Blogs Revisited) the line taken was very much of the ‘this isn’t a problem’ variety. To now see that the current ministers accept the point is heartening to say the very least. The argument now boils down to not whether means-testing is a problem, but how significant a problem it is. Great stuff! The Committee Stages of the Pensions Bill now look to me to be the point where this important issue will finally get the public airing it has always merited. I can’t wait until Easter-time.
Also in the papers this weekend I noticed that the Prime Minister, Gordon Brown, mentioned pensions in an interview in the Observer2. It’s not often Prime Ministers speak about pensions so it has to be significant I think. This is what he said:
“…Generally speaking the level of assets in the economy has risen quite fast. And you take pensions. I mean people have said rightly so that we've got to make sure that everybody has security in retirement. And if I say to you that the assets of our pension funds had doubled from 500 billion to a trillion over the last ten years people don't actually think that because they think there has been something else going on. Actually the assets of pension funds have doubled over the last ten years. So people have wealth in their houses, they have wealth in their pensions.
And that is not complacent because I would like to see lower income people having more wealth. I'd like to see the financial literacy that you want to see extended particularly through schools and colleges and their education programme. But I don't know if we should draw a general conclusion about the economy because savings ratios vary a great deal in different countries depending on what the economic circumstances of the time are.”
What I hear there is that our pension funds are in good health and have gained in strength over the last decade, but we’re not going to be complacent about that and we’re going to build pension wealth for lower income people too. Sounds good to me…
7 January 2008
1. "'Structural flaw' in pensions bill", Financial Times - 7 January 2008
2. "Interview: Gordon Brown", Observer - 6 January 2008.
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