Pension v ISA: what future for workplace saving? 27th June 2.30-4.40pm

This should be fascinating. A debate between the quiet and unassuming, Michael Johnson and trade union Baroness, Jeannie Drake on the future for pensions (or is it workplace savings?)

 

"Dear colleague
 

The coming year will be pivotal for the future of UK retirement savings with a major review of automatic enrolment and the launch of a potential rival to workplace pensions in the Lifetime ISA.

On June 27, the TUC is to set out its proposals for the future of automatic enrolment with the publication of a report Unfinished Business: where now for workplace pensions?. It continues the long-standing campaign by the trade union movement to secure decent retirement provision for all workers.

The report will be launched with a debate between two of the foremost figures in devising these contrasting approaches to saving for retirement.

Baroness Drake was one of the three members of the Pensions Commission that revolutionised workplace pensions saving with its advocacy of automatic enrolment a decade ago. She is also a Labour peer and former Deputy General Secretary of the Communication Workers Union.

Michael Johnson is a Research Fellow at the Centre for Policy Studies who has provided much of the intellectual ammunition for a move towards an ISA-based system for retirement savings.　 A former investment banker, he later worked for an actuarial consultancy and ran David Cameron’s Economic Competitiveness Policy Group.

The event will be chaired by TUC Deputy General Secretary Paul Nowak.

It will take place at Congress House with registration from 2.30pm for a prompt 3pm start. The event will finish by 4.30pm.

This event will be of interest to trade unionists, policy experts, pensions industry representatives and others.

To register please click on the link below:

https://www.eventbrite.co.uk/e/pension-v-isa-what-future-for-workplace-s...

Gregg McClymont MP: Rethinking Pensions Conference 2014

Picture of Labour Shadow Minister for Pensions Gregg McClymont MP, speaking at last months "Rethinking Pensions" conference. 

This took place only a day after the Budget, when the Government announced its plan to allow personal pension policy holders to "cash in" their accounts when they retire rather than buy an annuity. 

Gregg apologised to us that he would have to leave early since he had to go to the House of Commons to listen to Coalition Pension Minister, Steve Webb MP give further details of the proposed changes. 

This is the sort of situation when politicians earn their money. A massive change in pension policy (and largely unexpected by all including the media) was less than 24 hours old yet the "Loyal Opposition" had to come out very quickly with a considered response. 

Gregg suggested that he could be using this conference as a test bed for the debate in Parliament later that day. He wants more detail about the Budget proposals but thought that the the new approach of yesterday, seemed to be a move away from the Turner Commission consensus building on Auto-enrolment? It also seems at odds with the apparent government support for Collective Defined Contribution (CDC) schemes? How can CDC work if people take their money out in cash at age 55? How can you share the risk? Who and how will this "advice" to savers be provided? Are pensions becoming an Individual Savings Accounts (ISA)? 

As well as being a professional politician (and of course in my view on the side of the forces of light and reason), Gregg is also a former Oxford don - so was able to think on his feet and give a good account of himself. 

Check out this article in Professional Pensions about what I think is the debate between Greg and Steve Webb later that day in Parliament.

My own initial views on the Budget proposals are here. 

"Pensions will not exist by 2050"

It seems that the Daily Telegraph has a silly season in December as well as August (some would argue it actually lasts 12 months).

Michael Johnson, a research fellow at the Centre for Policy Studies is quoted here as warning that private pensions will soon cease to exist since young people see having immediate access to money more important than long term retirement plans.

I need to check with Michael that he has not been misquoted since the Telegraph has been writing some complete hysterical drivel about pensions lately. The reasoning is also a bit odd and Michael is usually pretty "bang on" about private pensions (not public sector pensions).

Young people have always wanted ready access to their money and been reluctant to save for your retirement. That is why you and your employer need incentives to join a pension and (like taxes) for it to be made compulsory. 

Also young (and older) people are not being completely stupid about not saving for their pensions. This is because for many the pension they are currently offered or have access to is just completely rubbish. They are being ripped off for a hugely expensive product that offers them no certainty in retirement.

While I think everyone should save for their pensions I can understand why so many make the understandable (and even rational?) choice not to save.

Auto-enrolment and universal pensions will make a difference. But unless people have the confidence to invest in a product that gives them some sort of guarantee of financial security in their old age then I think many won't bother. This future burden on the taxpayer should be the key issue for the Telegraph.

 I suspect that Michael is being polemic in order to bring attention to a real serious problem.

Yet his reported solution is wrong. Saving in a short term ISA is not the answer but an affordable and sustainable defined benefit scheme for the private sector is.  It is also going to have to be compulsory (at some stage).

Unless we sort this out I suspect we will soon be seeing future articles glamorising the workhouse for pensioners.