Politics vs pensions: no one wins

Michelle McGagh
A2CWRN Royalty free photograph of pension business headline in UK financial times pension; retirement; old; age; pensioner; prop
A2CWRN Royalty free photograph of pension business headline in UK financial times pension; retirement; old; age; pensioner; prop

It's often said the politics should be taken out of pensions but this is never going to happen, the most we can hope for is a pension commission to make sure politicians know what they need to do for the good of future retirements.

The National Association of Pension Funds, trade union the TUC and the Association of British Insurers, have urged the next pension minister to make establishing an independent retirement savings commission their first priority.

The duty of the commission would broadly be to make sure everyone is saving enough for a comfortable retirement and that retirement solutions are suitable for turning pensions into income. This is a large remit and covers both workplace, private and state pensions as well as pension ages and the incentives used to get people to save.

There is a lot to do but we know that pension commissions work. We've had two in just over 10 years, the first run by Lord Turner and the second by Lord Hutton. Both of which helped us get to the goal of automatic enrolment into pensions, which is arguably our biggest pension success of recent years. Lord Hutton even said his biggest regret was failing to make the pension commission permanent.

About time

A commission is long overdue. We are facing a number of challenges due to our ageing population and the new freedoms and choice are making pensions even harder to navigate so good outcomes are not guaranteed.

The low pay commission is a good model for the new commission to follow. It is independent but has the ear of politicians who take its recommendations seriously, although it is not allowed to make decisions on low pay, as it should be.

Pensions can never be taken out of politics, and neither should we want them to be. As TUC campaigns boss Nigel Stanley says, pensions are fundamentally political and you can tell a lot about a society by the way it organises its pensions.

A commission would not replace political leadership or decision on pensions but it would help shape retirement policy is a holistic way. We need an independent panel to determine how our retirements will look and help achieve some stability for savers before they reach retirement.

A commission is the only way to make sure pension policy is influenced in a way that benefits both savers and retirees over a long term, rather than over the short five-year parliamentary term.

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