When it comes to elections, the pensions industry often amasses a shopping list of requests for policy change.
Like most shopping lists, things will be missed and there will be items that are not really needed. Other items may initially look interesting but simply waste money and will never be used.
My wife gets annoyed with me when I go shopping as I tend to deviate from our shared online list and pick up tactical items, as opposed to a collection of ingredients needed for a particular recipe. She reminds me of the benefit of starting with a meal plan.
There is a parallel here. In recent years, policy changes have been rather more tactical than strategic, focusing on interesting ideas for change, as opposed to a roadmap. A shopping list, rather than a meal plan.
The election in July provides an opportunity to take a longer-term view of retirement planning. Should Labour form the next government, they have stated that they will conduct a full review of the pensions landscape.
They have even rowed back from some of the short-term proposals previously suggested, most notably, the reinstatement of the lifetime allowance.
You have to go back to the early years after stakeholder pensions to reveal the last time we took a long-term view for pensions. These were introduced in 2001, with a compulsion on the employer to set up a scheme, and to pay into it if employees joined, but it was up to those employees to opt in.
That wasn’t hugely successful in improving take up.
By 2012, a new regime was introduced in the form of auto-enrolment. While the underlying pension products proved to be very similar to their stakeholder forerunners, it was underpinned by the principle that employers would have the added obligation of joining their employees, who in turn would have the ability to opt out, should they so wish.
This was hugely successful in improving take up.
AE was conceived by an independent commission under a Labour government, but largely implemented under the Conservatives, with the steady hand of one of our longest serving pensions ministers, a Liberal Democrat.
Some people say that the perseverance of this policy can be attributed to the independence of those involved at the outset. There may be some truth in that but, more likely, it comes down to the consensus that was formed and, over time, its self-perpetuating success in improving retirement savings coverage.
AE is more in the mould of a meal plan than a shopping list. A multi-decade plan rather than a short-term intervention.
Top priorities
At this point, there are three main areas of the pensions landscape that any review would do well to consider.
