A bad week for pensions, but there are some positives
Pensions minister Steve Webb had to admit that the government would have to delay it much-anticipated pension reform because it has been stumped by the 'scale and complexity' of the job.The first thing to say is 'no kidding'. Of course the job, including the introduction of a £140-a-week state pension and linking the state pension age to longevity, was big and it was bound to be difficult – the pensions minister must have set eyes on the 1,000-pages of pensions regulation and policy at some point.
It's a shame that the government hasn't got its affairs in order when it comes to these sensible reforms, ironically the £140-a-week pension is due to remove a lot of complexity from the system.
At a time when companies across the country are gearing up for auto-enrolment and the beginning of a government initiative to automatically put millions of UK employees into workplace pensions from October, it would have been sensible to have all our pensions reforms and policy joining up.
A pensions system that works is a tall order but the reforms currently being worked on are a good start.
A week that had started badly for pensions only got worse when Labour leader Ed Miliband announced he planned to tackle the 'massive, massive issue' of pensions, which he branded a rip-off.
It's no secret that pension charges can eat up a huge amount of a pension pot, Miliband cites up to 50%, although I'd add the caveat that it depends on the funds that the pension is invested in.
No-one can disagree that we need fairer and more transparent charging when it comes to pensions – if you're being asked to lock your money away from 40 years, then its only fair that you know what charges are coming out.
The real shame in Miliband's attack didn't mention the alternative to the high-cost pension that the UK has grown used to. With the introduction of auto-enrolment comes the creation of the National Employment Savings Trust (Nest), the government-backed pension, which will be a low-cost pension invested in passive funds.
And let's not forget the equally low-cost competitors to Nest that are emerging.
Yes, Miliband is right we do need more competitive charges for pensions but he should have mentioned that change is coming. At a time when the state is auto-enrolling people into pensions we don't need to give them reason to opt out.