The appointment of Esther McVey as secretary of state for the department of Work and Pensions in the UK government’s latest ministerial reshuffle has been slammed by industry commentators concerned about a lack of stability and the possibility of ‘short term tinkering’.
Jon Greer, head of retirement policy at Old Mutual Wealth said that it was “disappointing” that one of the most important jobs in government, which has a huge bearing on people’s financial wellbeing, has become “a merry-go-round”.
“The DWP has a huge budget, overseeing billions in state retirement support and other benefits, as well as implementing crucial private savings programmes like auto-enrolment,” said Greer. “It is currently tasked with conducting a review of auto-enrolment policy, including looking at extending pension saving to 18 year olds exploring how the UK’s five million self-employed can be supported to save for the long-term. These are crucial issues for the UK’s long-term financial security and our personal prosperity.”
“Esther McVey must resist the temptation to tinker with the pension system and engage fully with the pensions industry, affirms the CEO of one of the world’s largest independent financial advisory organisations,” he said.
Nigel Green, deVere Group’s chief executive and founder, pictured left, echoed Greer’s concerns suggesting that successive secretaries of state for Work and Pensions have been unable to resist “tinkering around” with the pension system and pension policy.
“Ms McVey must not fall into this trap,” said Green. “Continual short-termist tinkering is counterproductive and misguided as pensions are, by their very nature, long-term.
“The industry and consumers demand a continued period of stability in the often-confusing and complex pensions sector to give the more recent major shake-ups, such as the new state pension, the new pension freedoms and the latest annual tax allowance rules, time to settle.”
Green added that he hoped that McVey would “engage fully “with the pensions industry and pension savers on any future changes in order to ensure that the current and forthcoming challenges are “successfully addressed and met” and that the policy fundamentals are “right”, and that any errors of the past are “put right in a measured, balanced and just way”.
‘Lack of stability’
Greer added that despite the fact that Esther McVey will have some understanding of the brief from her time as Parliamentary Under-Secretary for Work and Pensions, he is concerned about a lack of stability.
“Setting retirement policy and ensuring we have a well-functioning state pension system is a long-term project which is put at risk if the minister responsible for the DWP changes for one year to the next,” he said.
“Those planning ahead for their retirement need certainty and stability when it comes to government policy so that they can make informed financial planning choices. We need a minister to stay in the role for a number of years with a real commitment to properly scrutinising any proposed legislative changes to the pension system.”