Editorial: Picking a fight

You may have already read Steve Webb’s roadmap for the year ahead, the first in our new weekly series of columns from leading politicians, policymakers, regulators and pension professionals.

In the interest of balance, it is worth acknowledging a difficult few weeks for the dreamer at the Department for Work and Pensions.

First, the howls of joy from critics as a red card was shown over the government’s charges cap impact assessment, which the Regulatory Policy Committee said did not “adequately demonstrate” why a cap would have zero net impact on the industry.

Second, the derision over the proposal of switchable annuities. Just type those last two words into Twitter for a litany of swipes at this “half-baked” “non-starter” and the impact it could have on insurance companies.

In the background, defined ambition has taken its share of flak, while pot-follows-member pensions consolidation drags along its detractors.

On some issues, the level of reproach is relative to the sector, the size of the beehive being poked at.

Illustration by Ben Jennings

The minister should be applauded for standing up to vested interests if it is to the benefit of scheme members.

But as the mass media mind turns towards the next election, with George Osborne’s triple-lock pledge grabbing some headlines, the real question rests upon how much our embattled minister can get done before time’s up.

Sweeping changes to the annuity industry might yet be beyond his grasp, or at least this kind of reform. But even if a cap will, unsurprisingly, have more than zero impact, that could be a fair price to pay for an important quality safeguard for scheme members.

Again and again, industry experts – sometimes speaking from the heart, sometimes perhaps from the bottom line – have underestimated the competition in this market when discussing its regulatory boundaries.

A cap could provide release for some of the most vulnerable employees from the worst excesses of the market. Either way, we won’t have to wait too long to see which of these proposals makes it through the gate.

Ian Smith is editor of Pensions Expert. You can follow him on Twitter @iankmsmith and the team @pensions_expert.