As chancellor, George Osborne presided over one of the most radical periods of reform for pensions. The direction of pension policy was tightly controlled by Treasury.
Very few people saw it coming when the chancellor announced in his March 2014 budget speech that he would give ‘freedom and choice for all’ in how people take pension income – not even the FCA if reports are to be believed.
Tight Treasury control over pension policy continued as the chancellor deliberated over whether and how to cut pension tax relief for higher earners.
The ‘pensions-Isa’ system was mooted as the culmination of his project to hand savers complete control over their retirement savings while also providing a welcome boost to Treasury coffers in the short term.
Meanwhile pensions minister, Baroness Ros Altmann, voiced her support for the current system of taxing pension income, rather than contributions, indicating a split between the Department for Work & Pensions and HM Treasury on the matter.
It is inappropriate to keep the public, press and industry guessing about the plans for pensions or for decisions on pensions to be politically motivated, rather than fiscally.
Playing with pension policy like a political football does not build trust in long term savings.
Britain faces a fundamental question of whether the country is able to sustain the retirement expectations of its growing and ageing population. Constant conflict and conjecture about changes to pension policy has, in fact, put some people off pension saving.
Recent research undertaken by Old Mutual Wealth with YouGov highlighted that as a result of recent changes to pension policy, 1 in 10 are less likely to start saving into a pension entirely.
Philip Hammond enters Treasury while our new Prime Minister calls for greater unity. Following a tumultuous time for pensions, a change in tone towards greater unity and cross-department collaboration would be welcome.
The new chancellor should commit to a return to a longer term, strategic approach to pension policy making, enabling all parties, from regulators, providers and customers, to make decisions with confidence that the landscape will not shift as fundamentally as it has in recent times.