Retiresavvy looks at the people who have most affected your pensions for better or worse – and why…
George Osborne & Steve Webb
It’s probably an understatement to say that George Osborne has been a divisive Chancellor, but it’s on his watch that the much-vaunted pension freedoms that end the requirement for most retirees to buy an annuity will be introduced.
Pension Minister Steve Webb has been a tireless champion of pensions and pensioners. Widely admired by the industry, his ideas on allowing pensioners to sell their existing annuities were picked up and turned into a policy at the last Budget. He has also been a very strong advocate of auto-enrolment, which is bringing millions of people into saving more or saving for the first time.
VERDICT: Heroes – many pensioners will have more flexibility in terms of how they spend their hard-earned savings in retirement, while auto-enrolment looks set to help reverse the UK’s long-term decline in pension saving.
One of the most visible and recognisable faces commenting on pensions who can regularly be seen on TV news, Ros has tirelessly pushed her pro-older worker agenda. Recent years have seen her taking the role of Director
General of older persons’ organisation SAGA from 2010 to 2013, while in 2014 she was appointed by the Government to be older workers’ tsar.
Ros has campaigned hard on behalf of workers and pensioners who have lost out by companies going bust and played a role in the creation of the Pension Protection Fund, an insurance ‘lifeboat’ for schemes, and other protective framework around pensions.
VERDICT: Hero – Ros is the closest thing the older generation has to a national spokesperson on pension issues.
Googling ‘Gordon Brown pension’ brings up over 3.8 million results. This is a good measure of just how controversial his 1997 decision to scrap the tax relief paid on dividends to pension schemes was.
The move has raised over £100 billion for the tax man – but is also widely recognised as being a major factor in employers choosing to close their final salary or defined benefit schemes. On the other hand, Gordon Brown introduced the £100-300 winter fuel payment for pensioners.
VERDICT: Mixed – while you’d be hard-pressed to find any spirited defence of Gordon Brown’s pension tax raid, the winter fuel allowance has been invaluable in helping many pensioners out of fuel poverty.
Maxwell’s impromptu late-night swim and the ensuing Mirror Group Pensions scandal in 1991, which revealed that the portly press baron had embezzled around £400million from his workers’ pension schemes, led to much stronger measures being put in place to protect pension scheme assets.
The reforms were made with the best of intentions and scheme assets are now arguably safer than they ever have been. But the ensuing red tape and regulation, including paying insurance premiums to the PPF and making sure schemes are fully funded – or have plans in place to close any shortfalls – have proven costly, leading many employers to wind down their defined benefit or final salary pension funds and close them to new members.
VERDICT: Villain – the shadow of the Mirror Pensions Group scandal looms large over the last 20 years of pensions policy.
In a bid to stop companies sheltering profits in pension funds in the 80s, the then-Chancellor of the Exchequer Nigel Lawson introduced a tax charge on scheme surpluses. This led to employers taking breaks from paying in – called ‘contribution holidays’ – and generally running down the often healthy state of their funds, and coincided with the golden age of generous early retirement deals.
Unsurprisingly, when stock markets dipped and the value of the investments pension schemes held fell, they were left with serious holes in their finances. Coupled with more onerous regulations, employers were left facing increased costs and gaping holes in their pension schemes that they had to fill.
VERDICT: Villain – what might have seemed like a short-term political gain ended up sewing the seeds of a serious and long-term decline of the UK’s final salary pension provision.
Mark Carney & Mervyn King
Current and former Governor of the Bank of England respectively, Carney and King have been pivotal in navigating the UK through the stormy waters of the financial crisis.
When Mervyn King cut the Bank of England Base Rate to 0.5% in 2009, little could he have known that it would remain at this level over five years later. The resulting low interest rates have been a mixed bag – good for many mortgage holders who have been able to benefit from lower payments, but bad news for savers.
The Bank of England also embarked on a £375 billion programme of Quantitative Easing (QE) – swapping government bonds for electronically-created cash in a bid to get money flowing into the economy. Pension funds and insurers are big holders of government bonds and have been adversely impacted by how QE has affected bond prices.
VERDICT: Mixed – the Bank of England’s decisive actions in the financial crisis arguably helped the UK, but savers and pension scheme members have been hit as a result.
What do you think of our verdicts? Are there any other pensions heroes or villains you’d name and why? Let us know in the comments below.
This article has been commissioned by retiresavvy and any opinions voiced are the author's own.
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