Royal London director of policy and former Pensions Minister, Steve Webb, has accused the Treasury of blocking “vital” pension measures in the Pension Schemes Bill, which was formally announced today.
Publishing a response to the Queen’s Speech a the State Opening of Parliament today, 14 October, Webb welcomed measures to advance the pensions dashboard, strengthen The Pensions Regulator and enable new forms of pension provision, but said that key measures have been left out because of splits in government.
He said that the Department for Work and Pensions (DWP) has been looking to advance policy in two important areas but their absence from the Pensions Bill shows that the department has been blocked by the Treasury.
These are the expansion of automatic enrolment and the consolidation of defined benefit pensions.
In regards to auto-enrolment, the DWP undertook a year-long review which concluded nearly two years ago. This recommended that automatic enrolment should start at age 18 (rather than 22) and that mandatory contributions should apply to all earnings (rather than only applying to earnings above a ‘qualifying earnings’ floor).
“These recommendations have been widely welcomed and accepted by DWP but Treasury opposition to the resultant rise in the cost of pension tax relief means that they are on hold,” Webb said.
The second key area is regulation of so-called ‘DB superfunds’ which would allow the consolidation of DB schemes.
“The DWP has consulted on regulation but the Treasury is concerned that these schemes might compete unfairly with insurers who sell bulk annuities to pension funds. With no new statutory framework, The Pensions Regulator will now have to improvise a regulatory regime within its existing powers,” Webb said.
He believes theses absences are sign of a “battle inside government where the Treasury once again has defeated the DWP”.
“As a result, the vital expansion of automatic enrolment is now on hold, and the regulation of pension superfunds has been left in regulatory limbo. It is one of the biggest failings of UK pension policy that the department with lead responsibility for pensions can be thwarted in bringing forward sensible reforms by an over-mighty Treasury which has no vision for pensions,”
— to www.pensionsage.com