When new ministers are appointed there is a risk that they simply roll forward everything that their predecessors had set in train. But change of leadership offers a good opportunity to reassess priorities – something which is urgently needed.
In my view, the low level of saving into DC pensions is the biggest timebomb we have in pensions, yet policy has been in limbo since the 2017 review of automatic enrolment. A top priority must be a plan to boost saving levels when cost of living pressures ease.
It is also clear that the administration of the state pension system needs urgent attention. The Department recognises that hundreds of thousands of people have been underpaid, and has recently reported on new errors in payments to some mothers who spent time at home with children. As well as fixing these errors, DWP needs to do more to improve checking of state pension awards to get them right first time.
On company pensions, there is a real risk that the current approach to DB pension funding is fighting the battles of years ago, and is driven by concerns over cases like Carillion or BHS, rather than reflecting current realities. DB pension scheme funding has been transformed in recent years and policy needs to be fit for purpose in the current era. In particular, there is a risk that some firms may be forced to put more money into their DB pension scheme than is necessary, instead of spending that money on investing for the future or paying better wages to their staff.
The best advice I ever received on becoming a minister was to identify a small number of big priorities and concentrate on these. In recent years unfortunately we have seen a ‘pepper pot’ approach, with vanity projects that have caught the minister’s eye taking up far too much attention. It has increasingly felt that ministers had lost sight of the big picture and could no longer see the wood for the trees.
The new DWP ministerial team will have my strong support if they can publicly identify their key priorities for the world of 2022 and beyond and set out a clear roadmap for delivery.
