I was hoping any major developments in the pensions world would happen while I was away in Germany, so I could come back to work when all the hard stuff was over.
My wish was not rewarded, instead while I was sampling the beers in Munich while on my way to a birthday party in Bavaria (a typical journalist’s jetset lifestyle, what can I say!) the pensions world seemed to have ground to a halt.
Imagine my relief when I came back last week, thinking at last people have gone on holiday and we can relax, but no, instead the first thing I look at, (after the daily torture of the market report), is the subject of pension transfer values as responses to a consultation by the Department for Work and Pensions (DWP) came flooding in.
After that slow start, pensions seemed to be on a roll and pension campaigners have received a boost as Saga Group publicly announced their support for the cause after an article on the issue in their magazine touched a nerve with their reader, (not much of a surprise really given Saga is targeted at the 50+ age group).
Incidently, it was good to notice the government does occasionally let John Hutton out of his dungeon, as he’s obviously working hard on the design of the personal accounts, to give the campaigners a bit of hope with the idea of reinstating people who lost their pension back into the State Second Pension.
That said, excitement should be put on hold for a while as it is apparently only something which the government is looking at - code for we may do it, but we're testing public reaction first as it would involve the pensioners actually buying themselves back in, so where the gain there is, we're not quite sure.
Meanwhile, the DWP has held yet another secret summit on the design of personal accounts, only this time the focus was on the decumulation process with no mention of charges or whether an industry model or Turner model is being favoured.
Although neither John Hutton or James Purnell attended, (it seems even Purnell’s been dragged into the dungeon in an effort to get the technical paper ready for November delivery, and his pensions blog has been taken over by employment and welfare minister Jim Murphy), DWP officials were treated to different views from across the industry on how personal accounts and annuities should work.
But as the meeting didn’t move onto alternatives to annuities, merely suggesting a default annuity option, some sources suggest the government still believes everybody should buy an annuity rather than go into drawdown, and is keen to limit personal accounts to the one option.
Given the problems it is currently facing following Ed Balls’ comments to Parliament on the subject, it seems the government may have no choice but to keep ASP alive or be accused of religious discrimination, and if that is the case then it may be impossible to keep personal accounts limited to annuities.
If the new system doesn’t offer the same opportunities as existing retirement products, what is the incentive for people to join? As with most pensions issues at the moment it seems we will have to wait until November and see if the DWP has taken the secret summit feedback on board, or whether the whole thing has merely been a publicity exercise.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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