Five years on the ‘pensions horse’, is Opperman winning the race?

On June 11, he will hold the accolade for the longest-serving pensions minister in UK history, surpassing Sir Steve Webb’s record — who we all know can talk for hours about GMPs and other bizarre technical details the system is made up of, but only few people have heard about.

Admittedly, being a pensions minister is not an easy task. I am sure Opperman was as puzzled by the complexities of the UK pensions system as we all were when we started on the jobs that brought us to the wonderful world of pensions.

But if in the first or second year he was forgiven for only speaking about the potential of pensions dashboards or the success of auto-enrolment — besides reminding us in every speech of his time as a jockey — more is demanded of him now.

Acting on the recommendations of the auto-enrolment reform – published in December 2017 when Opperman was already pensions minister – is vital

Five busy years

When we look back at developments in the UK pensions industry in the future, I am sure Opperman will be remembered for the work he did on the Pension Schemes Act, which laid the ground for pensions dashboards and allowed the creation of collective defined contribution schemes, as well as putting environmental, social and governance factors in the mind of every pension professional in the country.

But looking at this today, I am quite convinced that trustees and other professionals are not currently seeing the benefits of these changes, but feel somewhat overwhelmed with all that is being asked of them.

Pensions dashboards are proving to be a massive data correction exercise for older schemes, and a lot needs to be done to bring the sector to the digital world.

The CDC schemes legislation seems, so far, to have been created to fit the requirements of Royal Mail. The jury is still out on whether other companies will be interested in the model, and intentions to extend it to master trusts at decumulation are, as it says on the tin, still an aim in theoretical stages.

And when it comes to ESG, I am sure a book of similar length to War and Peace could be written with all the consultations, regulations and legislation with which schemes have to comply. The goal is a noble and vital one for the world in which we live, but simplification should have been the aim of the game.

From my perspective, Opperman has been successful in some areas — he listened to the industry when alerted to the issue of small pots in master trusts, and a ban is now in place to stop fees being charged to pots worth less than £100.

I agree with pension specialists that this move does not solve the problem and more needs to be done but, as an immediate solution to a much bigger problem, it seems a step in the right direction.

He also listened to Margaret Snowdon and her peers at the Pension Scams Industry Group and has been supporting them in the fight against pension scams.

I do not think we will ever live in a world without scammers, but coming together as an industry and sharing best practice is a great step forward to start tackling one of the most important issues affecting pension savers nowadays.

Room for improvement

History books will say that the past five years were not easy when it comes to UK politics.

After not only dealing with Brexit and all the disruption that it brought — meaning that for several months no other piece of legislation could see the light of day in parliament — the government also had to deal with a pandemic, bringing up the storm we are facing today.

I imagine pensions reform is not high up on the agenda currently, when inflation is skyrocketing, people are facing preposterous energy bills, and the cost of living is putting the lower paid in an impossible situation. Nevertheless, there are some issues that should have been tackled over the past five years.

I am sure you have heard it all before, but I will say it again: self-employed individuals need a pension savings system and the current solutions, frankly, are poor and not enough.

With so many consultations and calls for input launched in the past two years, why not add this topic to the list? Why not launch a solution with HM Revenue & Customs to get them saving through the self-assessment system? These are all questions to which we urgently need answers.

Acting on the recommendations of the auto-enrolment reform — published in December 2017 when Opperman was already pensions minister — is vital.

I agree with specialists who say that the current cost of living crisis means the changes — lowering the minimum age from 22 to 18 and abolishing the lower earnings threshold — should not be implemented now, but creating a roadmap for these changes should already be in the works.

One last note on defined benefit consolidators, which after years of work had to wait for the Pensions Regulator to step up and create rules for this sector, despite a consultation being launched on this by the government in December 2018.

One of my sources says this is now the longest-running pensions consultation without a response from the Department for Work and Pensions. Will it ever see the light of day? It would be good to get the government’s views on this aspect.

I wish Opperman a long successful tenure as pensions minister. As a word of advice, if I may, I would suggest he stops blocking journalists on Twitter for nothing more than accurately reporting on reactions to his statements.

As pension schemes know, engagement is always better than divestment. If only he took this advice to heart.