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Fix the pensions farce now

Martin Campbell
12.10.04


Pensions are the new rock 'n' roll. We are all talking about them. They are on the 10 o'clock news, the front pages of newspapers and you hear about them in pubs. We are all waking up to the fact that for the first time ever, future generations in this country will have less to live on in retirement than today's pensioners - unless something is done soon.

Blood, sweat and dirt
The evidence was there at last week's Labour party conference. As Teflon Tony did his best to survive the dirt - some say blood - on his hands from Iraq, it was no doubt a canny move to talk about turning his attention to pensions. Not only because his arch rival and leader of the opposition Gordon Brown has dirt on his hands over pensions, but also because we are all getting worried about them - and for good reason.

Focusing on State pensions, Blair said he wants to cut the crazy complexity and heavy emphasis on means testing. Halleluiah. But all of this has been Gordon Brown's deliberate doing. Downing Street is in for yet more neighbours-from-hell action before one of them moves out.

Mr Blair was also aware that we are on the eve (due October 12th) of Adair Turner's Pensions Commission reporting back on the extent and nature of the crisis facing UK pensions. The extensive analysis and number crunching he has done over many months now will of course confirm that yes there is a crisis and a deeper one than previous Government rhetoric would have had us believe.

Political ping pong
Cue Mr Blair taking personal control, indirectly incriminating Mr Brown. The Chancellor will no doubt muddy the waters of responsibility by welcoming Mr Turner's thorough analysis and by agreeing that his Commission should now carry on to identify what needs to be done to solve the crisis.

All colourful political ping pong, but very frustrating to those of us who have been involved in pensions reform for too many years now.

It is not that these latest twists will point us in the wrong direction. It is just the time its taking to get round to doing the obvious - things so many pension experts have agreed need to be done for a long time now. Timing may be the secret of great British comedy, but this one is becoming a farce.

Fudging the issue
Turner will simply confirm there is a crisis. Thanks Adair, but we knew that. Having not specified exactly what needs to be done to fix it, Brown will simply welcome his report and commission him to carry on with part two to identify the solution.

Will it be making pensions contributions compulsory - the original idea Turner was commissioned to explore? Will it be yet more Governmental tinkering with private pensions? Will employers be forced to become our pensions guardians?

All wrong - it is State pensions stupid. You have got to fix the first floor, where most people live, before looking at the second, third and fourth. Everyone in the pensions world can see this now. But no, we are going to have the Pensions Commission take another year or two to conclude more of the bleeding obvious.

Bad timing
This further time wasting is of course useful to a Government looking to win a third term - the results will not be out until after the election. But it is very bad news for the UK.

Fixing the pensions crisis, starting with replacing the state pension dog's breakfast with a simple and more generous Citizen's Pension for all will be made far easier, quicker and more effective if tackled now, not in another three years time. Unwinding the current mess - especially in relation to means-tested benefits - will become a bigger and bigger challenge as the months and years roll on.

Trade unions, opposition parties, the CBI, consumer groups, in fact all of us should seek to make the message to Government clear. You have had enough time. There is a clear consensus as to what needs to be done and it starts with fixing your own mess - the state pension. We cannot let solving the pensions crisis be put off for another few years for the sake of a Government seeking its third term.

We need to make it a pre-election issue. We cannot just sit back and let it become inevitable that future pensioners will be worse
off than today's.

Elections are often fought over smaller and shorter-term issues - not things of the scale and long-term nature of pensions. It is one of the reasons why politicians are so bad at fixing pensions - other than their own. Even if for the wrong reasons, Tony Blair has hinted that he is keen to do the right thing with pensions now. We owe it to ourselves to make sure he follows through right away, not in four years as he contemplates his own retirement.

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