The much-lauded Pensions Commission has been revived to look at retirement income adequacy issues – but will the government be able to act on its recommendations?
It was with much anticipation that pensions industry representatives gathered at the Coin Street Neighbourhood Centre in Waterloo in London on Monday for the relaunch of the Pensions Commission.
It marked a fairly swift U-turn on the part of the pensions minister, Torsten Bell, who had remarked in March that he felt those thinking a new Pensions Commission could solve the industry’s problems were in “la la land”.
To the minister’s credit, he acknowledged that he had learned a lot about the need and capacity for consensus on pension reform in his first six months in post. Both he and Liz Kendall, the work and pensions secretary, spoke passionately about the need for action on retirement outcomes, and in particular inequalities that affect women, minorities, and the self-employed.
Among the pensions sector celebrities in attendance at the launch was one of Bell’s predecessors, Steve Webb. While welcoming the new commission, Webb warned that the members were already working with “one arm tied behind their backs” due to the restrictions placed on them by the government.
As Pensions Expert outlined in this article, the commissioners have been given a fairly broad remit. They will explore outcomes and risks facing future pensioners, seek to find ways of improving outcomes and addressing inequalities, and assess the longer-term challenges facing the UK as its population ages.
However, some of the most obvious levers to pull will remain untouched. Auto-enrolment minimums will not change, largely due to the cost pressures facing businesses through higher national insurance contributions. The tax system is out of scope. The triple lock is also too politically sensitive to meddle with, despite several recent proposals for change.
That said, the original Pensions Commission was not asked to come up with a policy as radical as automatic enrolment – and, indeed, exceeded its original remit with several of its recommendations. I recommend reading this article from the Institute for Government looking back at the Turner Commission for more on this.
I’m confident that the commissioners will not be shy to challenge the government with bold reform recommendations. What I’m less certain about is whether the government will be bold enough or strong enough to carry them out.
Let’s hope that, at the very least, government finances are in better shape by 2027 and increasing contributions is a realistic possibility.
Nick Reeve is editor of Pensions Expert.
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