Webb’s “golden opportunity” – an assessment of his first 100 days

Six months ago, even the most optimistic Liberal Democrat could not have predicted an MP from Britain’s third party embarking on a reformation of the pensions industry.

But six reviews and counting later , Steve Webb has set the agenda for a radical rethink on how Brits are to save for their retirement.

And the verdict: so far, so good.

“Overall we would give a positive report,” says James Walsh, senior policy adviser for workplace pensions at the NAPF. “The best thing is that we have got a government that is serious and interested in pensions issues.”

Webb was a popular figure within the industry before joining government. With a professorship of social policy under his belt, his appointment was widely welcomed.

“He is probably the most knowledgeable pensions person the government has,” says John Jory, director of B&CE Insurance. “It would be great to have him for five years – certainly for longer than other pensions ministers have been.”

He adds: “He’s got a golden opportunity to introduce simplicity into the system that the previous government failed to do.”

A review too far

But while most of his reviews have been universally welcomed, the decision to switch the inflation link in private sector schemes from the retail price index to the consumer price index met with a backlash.

Many felt the move was too sudden and too soon, with not enough industry consultation. There have also been criticisms levelled at Webb and the government over the speed of their review programme.

“The government has set a lot of hares running at once,” says Walsh. “Pensions are a long term issue so there is not always a need to rush.”

He adds: “Political urgency has to be tempered with the need to consult with the industry.”

The next phase of Webb’s ministerialship – where his reviews and consultations start to bare fruit – is set to throw up some tough challenges.

John Hutton’s review of public sector pensions is assessing a number of contentious issues, such as paring back benefits and raising the retirement age. All eyes will be on how Webb deals with its recommendations.

“That will be the real test,” says Mark Twigg, director at financial policy and lobbying group Cicero. “That will show how unpopular and bold the government and Webb are prepared to be.”

Twigg points to the 2005 review of public sector pensions which resulted in concessions on new members’ benefits, but left alone the retirement age of existing members due to pressure from both Gordon Brown and the unions.

Webb’s free reign

One reason for the flow of reviews and consultations coming out of the Department for Work and Pensions (DWP) and Treasury has been Webb’s unconstrained role.

Webb’s superior in the DWP, Iain Duncan Smith, has stated his interests are focused on welfare reform, allowing Webb a free run at pensions.

However, the autonomy Webb has enjoyed for his pensions brief is also be seen as a potential weakness as Duncan Smith’s strong interest in welfare policy could be to the detriment of pension issues.

But Twigg disagrees, adding: “As long as Webb has got backing from the secretary of state and the DWP has the backing from the Treasury, there shouldn’t be a problem.

“It is all a question of how far the government is prepared to go.”