The long wait for Gordon ‘Gordo’ Brown getting into 10 Downing Street is finally over, but what impact will the new head of Her Majesty’s Government have on pensions and savings policy in the UK?
As chancellor, Brown was not a friend of the pensions industry. One of this first acts in office, back in 1997, was a £5 billion a year tax raid on pension funds.
It helped plug government finances, contributing to his reputation for fiscal stability, but arguably weakened UK pension schemes – just as life expectancies began to rise and long-term interest rates began to drop.
In addition, he has presided over a complex tax credit system that many believe discourages poorer savers from making retirement provisions.
And his refusal to compensate those who lost out from collapsed final salary schemes has led to long-running protests over the unfairness of government policy.
Brown’s replacement as chancellor, Alistair Darling, is widely seen as little more than a ‘Brownite yes-man’, who will enable the new PM to continue in his role as the most powerful figure in British domestic politics.
Peter Hain, the new minister for work and pensions, is not thought of as a welfare expert and will no doubt take time to come to grips with the complexities of the UK’s pension policy.
Looked at in this sense, it is hard to expect any radical changes in policy in a post-Blair era.
On the other hand, Brown is a skilful and heavyweight politician. He will not want to be remembered as someone who inherited the top job and then lost it at the next election.
So he may well be prepared to change course in order to boost his party’s appeal. And as he has previously demonstrated, he is prepared to make bold moves to wrong foot opponents and show his independence.
A proper settlement for the festering sore of 100,000 or more employees who lost their pensions in what should have been safe company schemes could be one starting point.
Brown as PM might approve an aid package that as chancellor he would have balked at, and moves on issues like this could be part of a general ‘feel good’ agenda.
Retirement income could be an issue to win over older voters. Annuities are unpopular, and making it easier for people to control their income in retirement could be part of a late spring-cleaning.
It would not necessarily require major changes, but a willingness to talk with product providers to find out what they need to develop more flexible and innovative annuity type products, although there are signs this is starting to happen.
At the very least, there is now the opportunity for a fresh start.
It is really up to the new ministers and their civil servants to decide what should be done to improve pension savings – the new Prime Minister will, one suspects, be more occupied with issues such as Iraq, the health service, education and law and order.
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