Opperman slates lack of long-term vision in pensions, hints at reshuffle

Asked at The Investing and Saving Alliance’s Annual Retirement Conference 2022 what he felt about imminently becoming the longest-serving pensions minister in history, Opperman told Tisa head of retirement Renny Biggins that he may have “jinxed that” as “I hear reports of a reshuffle coming”.

“I have served under several prime ministers, [I’m] delighted to do this job, it is a job I asked to do in the first place,” he said, before comparing himself to Sisyphus, “who every single day would have to pick up a rock and push it uphill, and the next day would start again and push a rock uphill”. 

“We keep doing that day in, day out. Particularly in the private pensions space, that is a really good example of it because you’re trying to bring forward slow but significant change to a wonderful product that everybody buys into and we all want to support.”

Everybody is very keen to change stuff but not actually coming forward with concrete and definitive ideas as to how that is done

Guy Opperman

Opperman was critical of what he perceived to be a lack of long-term vision in the pensions industry, telling the conference that, were he at the Treasury or the Department of Health and Social Care, he would enjoy the support of think tanks that were “thinking the unthinkable”. 

“We just don’t have that in pensions,” he said.

“I wouldn’t say I’m on my own because I’ve got amazing civil servants. I’ve got an amazing team around me. But I’m always struck by how little input I get from industry as to what [it should] look like in five to 10 years’ time,” he explained.

“For my part, I think we’ve flagged dashboards, greater awareness, [collective defined contribution], reform of [defined benefit] hopefully continuing as it goes. I’m a big fan of superfunds, obviously Solvency II may impact on that. But there’s a whole bunch of stuff that we’re trying to do to create alternative products in DB and DC.

“That I think is the direction that I’ve set very clearly, but there’s other things that other people are maybe coming up with [and] I’d love to know what they’ve got to say. Don’t be shy.”

Compromise on statements season

Opperman stressed the continuing need for greater pensions awareness and doubled down in his support of the proposed statements season, which has been the subject of much industry criticism on the grounds that it would entail a lot of work for little reward.

The minister acknowledged it is “not popular with everybody”, but said it “cannot be the situation on an ongoing basis that people are not aware of the product that we’ve all bought into. And it’s a fundamental awareness that is the most important thing”.

“I'm fully aware that there is push-back from some organisations who say: you shouldn’t be trying to do a particular season at that particular time, it’s complicated and it’s difficult in terms of manpower and statistics,” he continued.

“I start from a really simple basis. I want there to be greater awareness of pensions, and I regret to say it is not my view that that awareness is being tackled by the industry as it currently exists.”

He suggested there was little difference between his proposal and Pension Geeks’ awareness days and events put on by Scottish Widows, which are well-received by the industry.

They were “a country mile better than anything else anybody is doing in the pensions space to engage with customers”, and the goal of a statements season was to expand that to more people — the statements season being “exactly the same thing”, he said.

Though there had been push-back, Opperman said he is “certain we can find a way forward”, which would entail a midway point between the events of the type put on by Pension Geeks and Scottish Widows and his statements season proposition, “which is a big, clunky intervention”.

“There is a middle ground and we’re working on that middle ground.”

He pointed to other work being done, such as on the midlife MOT, but again criticised the industry for a lack of clarity on what it wants the future of guidance and advice to be.

“Come to me with solutions rather than problems. Tell me exactly how you would redefine advice and redefine guidance and redefine a crossover between the two,” he said.

“Who would do it, what would be the insurance liabilities, who would have the capability of doing this, who would regulate it?

“Everybody is very keen to change stuff but not actually coming forward with concrete and definitive ideas as to how that is done,” he suggested.

Small schemes do not provide value for money

The government has long stressed the importance of consolidation in DC, especially in the context of providing value for money. Opperman confirmed that, barring exceptional circumstances, he was “not convinced” that small schemes were capable of delivering value for money, not least because “the regulator and government are asking more of trustees”.

“Given the fundamental requirement is better outcomes for members, I don’t believe, particularly in the DC world, that small is in any way the right way forward,” he said.

He argued that the question was less about whether consolidation was right and more about the pace at which the DC industry moves towards an Australian-style model, emphasising the importance of scale, not least for the access to investment that it brings. “The sooner we get on with this, the better,” he said.

He added, however, that the concept of value for money needs fleshing out, and that he would spend a lot of his time — “if I continue to enjoy the prime minister’s support for me in this post” — assessing and “driving forward what value for money looks like”.