It is hard to pinpoint when it might have happened; however, at some stage in the last year, pensions policy in the UK seems to have shifted its burden from the Department for Work and Pensions (DWP) to Her Majesty’s Treasury.
Traditionally, both departments led on pensions in general but took control of different aspects. The Financial Conduct Authority (FCA) oversaw the activities of the Treasury, while The Pensions Regulator (TPR) oversaw the DWP’s activities.
There were certainly some shortcomings to the divided approach, as sometimes both the FCA and TPR are relevant in policy decisions; for example, this was the case when the Conservative government wanted to place a cap on charges relating to workplace pensions.
There is also concern that the two departments operated in silos, barely talking to each other. Pension tax relief has huge implications for the system as a whole, but the Treasury and DWP rarely spoke to each other.
The burden shift
Slowly, over the last year, the entire pension policy burden has shifted towards the Treasury and the subject of tax relief has remained elusive.
The Treasury sees pensions as another way in which to save money and cut costs in light of the austerity agenda, and sometimes it does not consider the knock-on effect of its decisions. Pensions are the DWP’s bread and butter and it considers them a key societal intervention.
It is also important to note that Treasury decisions tend to be encapsulated in finance bills. This means scrutiny is limited, as the Lords have no jurisdiction in the area.
While having one master can be more effective, efficient and more joined up, there is concern that it is the wrong master that is now holding the reigns.
This is an added complexity in the pensions game, particularly for independent financial advisers (IFAs). The financial management of assets is made a lot easier through streamlined processes, such as back office systems for IFAs from providers such as http://www.intelliflo.com/ IFA back office systems, and switching pensions can be fairly straightforward. This straightforward approach is also what we need coming out of Westminster.
These changes have been flying under the radar, with little public awareness or attention in Westminster. This places a clear message that pensions are not at the forefront of any government agenda right now.