Is the government’s liberalisation of the pensions market the next mis-selling scandal waiting to happen?
As the UK heads towards ‘pension freedom’ day on the 6th of April there is still a lot of uncertainty about what the effect of giving retirees freedom to choose what they do with their pension investment will be in the medium to long turn.
Weber Shandwick brought together leading figures from the pensions and advice sectors at a breakfast event to discuss the likely impact of the policy change and the communication challenges that it raises for the government, pensions providers, the advice sector and regulators. On the panel was David Geale, the FCA Policy Director; Katie Morley from the Telegraph; Mark Longhurst from Sky News; and Weber Shandwick’s Head of Brand Strategy, Liz Wolstenholme.
The consensus was that pension policy is always very political. Pensioners and those approaching retirement are the most likely to vote. The generation of baby boomers reaching retirement age are engaged with issues and aren’t afraid of putting their points of view across.
Panellists discussed the perennial challenge in public policy of striking the right balance between giving people freedom and protecting people from their own misjudgements or the risk of exploitation from others.
Attendees agreed that it is those with the most money who are most engaged with the discussion about what the new pension policy means for them. This raises questions about lower earners affected by the changes, who have engaged less with the detail of the changes and who may be more vulnerable to making wrong decisions, being mis-sold products or falling victim to scams. As well as the fact that they are likely to be less engaged with the detail of the reforms, those with the smallest pots are likely to find it more difficult to access specialist financial advice.
The balance between giving people freedom and protecting people from things going wrong has been at the heart of the political debate about pension policy. Whilst George Osborne and the Pensions Minister Steve Webb have emphasised the importance of trusting people to make decisions about their own future, the reaction from the Labour Party has focused on the risk that people could make the wrong decision and the important role that the state has in ensuring that the vulnerable are protected.
The question is what do the voters want? As Weber Shandwick’s Liz Wolstenholme highlighted, the baby boomer generation is independently minded. They don’t want to be talked down to and believe that they should be allowed to make decisions that work for them. On the other hand, voters also believe that the Government has a responsibility to protect them. The Government knows that whilst reforms have been popular so far, public opinion could soon shift if the reforms unleash a wave of mis-selling.
The final verdict on whether the Coalition’s pension policy will be seen as politically successful won’t be clear until well in to the next parliament. The question is, will George Osborne or Steve Webb still be around to take the plaudits or face the blame?