Connected Research

Union policy research in the 21st century

ACA calls for Pensions Commission

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In a further sign of the breaking down of the 1990s pensions consensus, the Association of Consulting Actuaries has today called for a Pensions Commission to ‘challenge the legal and regulatory hurdles standing in the way of sensible long-term pension designs’.

Reporting of the ACA survey has been quite widespread, with both the BBC and The Guardian giving space to ACA’s view that the decline in quality pensions provision is evidence of the failure of public policy (though the first part of the BBC report has been extensively re-written around the DWP’s reaction to the survey).

We should mention here that one of the contexts to the ACA survey and its call for a new pensions commission is likely to be the DWP’s rejection of the conditional indexation model proposed by ACA during its deregulatory review.

That there has been a decline in quality workplace schemes is self-evident. Its impact on the pensions of future generations of pensioners, and on state finances, is also quite clear. Whether we need a new pensions commission, before the proposals for tackling the decline in workplace saving made by the last one have yet been introduced, is a moot point. At the same time, the plethora of reasons why quality schemes have been closed in recent years stacks so high that to pick out failures of public policy seems, by itself, to be somewhat perverse: in my view, reasons why company schemes are closing are little to do with public policy and more to do with companies exploiting a period of worker weakness to erode a vital (and admittedly costly, at the moment) part of employees’ terms and conditions of employment based on short-termist considerations and fuelled by accounting standards that are unsympathetic to the long-term nature of pensions provision. The tide of scheme closures, in the face of DWP attempts to deregulate provision, seems evident proof that the policy ‘failures’ lie less at the public level than the corporate one.

Likewise, any attempt by employers to use auto-enrolment to reduce their investment in pensions at the individual level, on the grounds that auto-enrolment will increase overall costs, needs to be seen not as a failure of public policy but a function of the same attack by employers on terms and conditions. Nevertheless, ACA has done a favour in highlighting the potential for levelling down by employers, also highlighted some time ago by Tom’s post at labour and capital, and, if this is a likely outcome, it is one that will need to addressed in the regulations surrounding auto-enrolment.

A new pensions commission is unlikely to emerge with anything new. It will be distracting; the reforms proposed by the last one need to introduced and bedded down as a priority; and another pensions commission is, by itself, unlikely to see any change in the rate at which schemes are being closed. Getting bogged down in another discussion about conditional indexation is the last thing that is needed right now.

Pensions remains a complex area with many nuances, but, like climate change, it is one that is increasingly looking to be one which divides left and right.


Written by Calvin

04/01/2010 at 6:39 pm

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  1. […] ACA calls for Pensions Commission « Connected Research Calvin has a good post on pensions […]

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