Steve Bee: Another autumn, another pensions onslaught

Get set for change to your pension, because autumn is the time when it will happen.

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by Steve Bee on Sep 26, 2010 at 00:01

It was the 23rd of September a few days ago, the autumn equinox. After 89 days (from the equinox) the sun will stand still again on one of its solstices, the winter one. Between the September equinox and the December solstice we live in a period of the year we refer to as the autumn.

Autumn is a period of the year that early on in life I came to regard as the season when trees lost their leaves in the run up to the following winter season. Since I’ve been involved in pensions, however, I’ve come to look on the period between the autumn equinox and the winter solstice as the period when everyone in my industry eagerly awaits the changes to pensions that are perennially announced at this time of year. It’s become something that is as regular as the passing of the seasons; indeed I cannot remember a year in which we have not spent the entire autumn season in anticipation of major policy shifts in pension legislation.

This year is no different. We are all waiting this time for the outcome of the review of auto-enrolment, one of the key parts of the 2008 Pensions Act. Will it go ahead? Will it be changed? Will it be left as it is? No-one knows. There is plenty of speculation, of course, and much is made of the things ministers do or don’t say and even how they say what they do say while not saying what they don’t say. Hapless we look on hoping to glean some inkling of what seismic changes may or may not be coming our way “in the autumn” (a phrase that usually means “by the 21st of December”, but doesn’t sound so bad).

It may be because I’m getting older, but I’m getting a bit fed up with all this “we will report in the autumn” stuff; mainly because it just reminds me of the depressing regularity of change to our pension system. It seems to me these days that the real problem that we have with our pension system is just that; that it is subject to constant change. Indeed, change seems to be the only thing that is constant about our pension system.

It would be much more use to people who are saving for their pension if the system could be left alone for a while; a few decades maybe. Sure, it might not be the best system in the world, but if it’s left alone long enough we might at least have time to get used to it for all its faults. Here’s an idea; let’s have a review into whether constant change is something our pension system could do without, but please let’s make sure we don’t have to wait until next autumn for the report...

Steve Bee is managing pensions partner at Paradigm Pensions. Visit jargonfreepensions.co.uk where you can find a simple pensions A-Z.

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6 comments so far. Why not have your say?

People hate change. Change is a fact of life, but people do hate change.

Most aspects of change people deal with - employment, family, technology. Its all hard work. So if there are good excuses for avoiding change many people will avoid dealing with that change.

As Steve Bee says, we get pension changes as regularly as a Swiss Train. But pensions do not have an immediate impact on out lives, so people are happy to avoid this political football. It is only later in life that the impact of pensions becomes apparent, and then it is too late.

The perfect pension environment does not, and will never, exist. So can we have all the political parties agreeing that the current changes are the last for 20 years. The old regime lasted from 1952 to 1988, 36 years, during which the pension environment became an accepted part of the land scape, and pensioners are now seeing the benefits. There were anomalies, but nothing is perfect. People understood the system, more or less. From 1988 there has been ever increasing changes, and with the changes have also come more scandals.

Now people are not confident that the existing system will last more than 5 years or that it is truly beneficial - so why get involved. Hence the number of people using Buy-to-Lets as an alternative pension scheme. They, not the politicians, are/were in control of their future, .

Whilst NEST is theoretically a welcome addition do not assume that it will be an easy integration into the pension landscape. Stability for a minimum of 15 years is an absolute requirement to ensure that it has a chance of working. Why doesn’t Ed Miliband make that his first major policy statement.

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The only thing which should change is the funding of the public sector pension schemes. Maybe they should be contributory/paid for by the members? For the new ones, at least, if existing can't be changed.

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The new government should have the courage to tax pensions properly. £38 billion would save a lot of the pain of the proposed cuts. If people don't have the intelligence and discipline to save for their old age why should I pay tax to subsidise the finance industry and their crazy schemes? Stop pretending that tax avoidance is the key to old age prosperity and face the fact that commercial pensions are a simply the modern day "MIRAS" that needs to be dumped as part of the cuts.

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Dear Chris - its obvious you only digest headlines. There are, I believe good reasons for dropping tax deferral, but yours isn't one of them.

If you don't provide relief on pensions you can't then tax pensions in receipt, or you are taxing the same money twice - which most people believe is wrong. Pensioners pay tax on pensions that have received relief, thus offsetting the relief.

In other words there isn't £38bn to splash around despite what the politicians like to scream - unless of course you want to be known as the person who kicked pensioners twice. Actually you would be in good company. Politicians talk big, but act very,very small.

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It is amusing too see a comment such as yours. It suggests a resigned knowledge about public sector pensions but you should know your beliefs are incorrect.

As far as I can recall my first months salary as a public sector worker had my pension contribution deducted at source and thirty years later this continues. Currently at 9.5% I think.

The only people I know who haven't contributed to their pensions or had many years of contribution holidays have all been private sector workers. Some of these are on pensions of 6 figures and retired in their 50s.

Aren't facts tiresome?

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Sep 27, 2010 at 13:18

JK: An interesting thought, perception:

It is curious how private sector workers notice the public sector workers - the ones on 6 figure salaries and public sector workers notice the private sector workers - the ones on 6 figures. We are outraged by the same thing, in the opposite camp.

My experience is, maybe quite by chance, the opposite of yours.

As for your payments in, I know that such arrangements exist but is there not a variety of schemes, with different terms?

I still think that the public sector pensions should come from a well defined pot, which, when it is in surplus, could be invested in British industry or research etc. Maybe this comment is more to do with transparency. Do you have a view on that aspect?

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