Former pensions Steve Webb has criticised the UK government’s approach to dealing with pensions suggesting that it does not have a long-term strategy for the industry.
He said this during a discussion at the Morningstar conference on 4 May 2023, where he went on to say “it would be great to have long termism in pensions”.
Webb, who is a partner at LCP, said: “When I switched over as minister in 2010, I had I think 11 predecessors in the previous 15 years, so the median life expectancy of a minister is about 13 months before you’d either be transferred or sacked.
“The current pensions minister Laura Trott, who came in last autumn, I think is excellent. I think she’s a really impressive minister and, therefore, she will soon be promoted out of pensions which is deeply depressing when you think about it.”
Since Webb left the role in May 2015, there have been five pension ministers, including Trott, Guy Opperman, Ros Altmann, Richard Harrington and Alex Burghart.
The short life expectancies of pension ministers in office means that the role is not seen as an important one. However, more time and resources need to be invested into pensions especially as the growing ageing population means many are heading for retirement soon.
Retirement plans should be a priority for many people – but unfortunately, with the rising cost of living, Brits are prioritising other areas such as mortgages and bills in front of retirement pots.
Webb said: “Imagine a world where lots of people are getting to 67 years-old with £70,000 ($89,000, €82,000) of outstanding mortgage and £70,000 in a defined contribution (DC) pot, what are they going to do? They are going to pay their mortgage.”
Another sticking point in the pensions industry that Webb spoke about is the ever-increasing move from the defined benefit (DB) generation to the DC generation.
He added: “I think one of things that’s going to become painfully obvious is that DB final career average type pensions are going to be the preserve of the public sector. My top tip for retirement is marry a civil servant as having a DB pension coming in is going to be a big thing, and without that it’s going to be very noticeable.”
A big part of retirement planning is to make sure that people will have the same income and lifestyle as when they were working.
But with many people not saving early enough or having access to big DB pots – Webb believes that inheritance will be a key part of retirement planning going forward.
He said: “It does seem to me that you can’t think of people’s retirement planning without thinking of things like prospective inheritance, obviously hard to predict, but that’s part of the plan.”