Electing to make pensions a priority
Pensions minister Malcolm Wicks talks to Personnel Today about the newly re-elected government's plans to improve levels of awareness and educate more young people across the UK about the importance of saving for retirement.
With the election done and dusted, the new Labour government can look forward to tackling some big issues - one of which is the so-called pensions crisis.
However, crisis is not a word pensions minister Malcolm Wicks chooses to use. Rather, he said - in his best politician-speak - there are some "big challenges" and a "lively debate" about whether the government should reform and modernise the pensions system.
Speaking before the election from his Thornton Heath constituency office in the safe Labour seat of Croydon North, Wicks stands by the government's record so far on pensions.
This includes confronting pensioner poverty by introducing the pension credit, giving the new pensions regulator more powers to act when things go wrong, and setting up the Pension Protection Fund (PPF) to step in when firms go to the wall.
"[The PPF] is something that took a long time to formulate and legislate for, but is now up and running and will be part of the landscape for many decades to come," he said.
Wicks cited the MG Rover disaster as an example of how the PPF can help employees who lose their pension rights when a company goes under.
"It means that at long last there is a process to go through and those workers will at least be assured their pension rights will be largely protected," he said.
There have been employer concerns about the PPF penalising well-run occupational schemes by making them subsidise poor ones. Wicks said he had calculated the average cost to employers to be the equivalent of 20 per scheme member.
"When I hear from employers about the extraordinary burden that the PPF is going to bring, I think hang on a minute, 20 - are you being serious?"
At the start of its second year, 80% of the PPF levy will be risk-based, so companies with schemes that are not so well funded will pay a higher charge.
As someone with a long-standing interest in social sciences, particularly family policies and welfare, and how they interplay with labour market issues, Wicks said he had found an ideal job in the Cabinet.
When his promotion was announced on Friday 13 June 2003, parliamentary colleagues jokingly asked him what he had done to deserve his elevation on that day, to a role that could be seen as a particularly hefty poisoned chalice.
But Wicks said he was "genuinely thrilled" with the role, because in terms of policy agenda, it will be among the top issues challenging the government in the next few years.
The route the government takes on pensions will be partly determined by the findings of the Pensions Commission, due this autumn. In its first report published last October, the commission's chairman, Adair Turner, said the UK effectively faced four choices: pay extra taxes, save more money, retire later, or become poorer as pensioners.
Wicks acknowledged that the government must do more to get people, particularly younger people, interested in pensions.
"I wouldn't venture into Croydon nightclubs on a Saturday night to talk about defined benefit pensions schemes," he said. "Yet, as we know, it is more sensible for people to be serious about pensions in their 20s and 30s, rather than when they are 55."
What Wicks finds frustrating are the four million workers who could join an occupational scheme and have access to an employer contribution, but choose not to.
"We've got a lot more to do to educate the public about pensions and savings, and to raise standards of pensions literacy," he said.
The mechanisms used to facilitate this could include auto-enrolment, combined pension forecasts and more employer responsibility, Wicks suggested.
He is, however, a strong advocate of the principle of personal responsibility.
"I think we need to shine the light of responsibility into the face of the individual a bit more and get them to wake up to the importance of pensions," he said.
"Unless workers start to show they are aware of pensions, aware of what their companies are offering and clearly value them, then eventually they might lose them."
He predicts the government now has a "window of opportunity" of between a year and 18 months to gain a progressive consensus on the way forward.
"The decisions we take today will affect the incomes and lifestyles of people who are retiring in the middle decades of this century," Wicks said. "But if the parties can't agree, then we'll do what we think is right."
As for his own prospects, Wicks played questions about a post-election Cabinet reshuffle with a straight bat.
"It's up to the Prime Minister what future role I have. I'm hoping that he won't become ageist. Better not, or I'll take him to court this time next year," he joked.
ELECTION RESULT: CROYDON NORTH
- Malcolm Wicks, Labour 23,555: 53.7% of the votes cast, down 9.8%
- Tariq Ahmad, Conservative 9,667: 22.0% of the votes cast, down 1.3%
- Adrian Gee-Turner, Liberal Democrat 7,560: 17.2% of the votes cast, up 6.8%
- Shasha Khan, Green 1,248: 2.8 % of the votes cast, up 2.8%
- Henry Pearce, UK Independence Party (UKIP) 770: 1.8% of the votes cast, up 0.4%
- Peter Gibson, Croydon Pensions Alliance 394: 0.9%of the votes cast, up 0.9 %
- Winston McKenzie, Veritas 324: 0.7% of the votes cast, up 0.7%
- Farhan Rasheed, Independent 197: 0.4% of the votes cast, up 0.4%
- Michelle Chambers, The People's Choice!... 132: 0.3% of the votes cast, up 0.3%
Majority 13,888 31.7
Turnout 43,847 (52.3%, down 0.9%)
WICKS' PARLIAMENTARY CV
- 2003 Appointed pensions minister, DWP
- 2001 Parliamentary secretary, DWP
- 1999 Parliamentary secretary, Department for Education & Employment
- 1995 Opposition spokesman, pensions
- 1992 Elected MP for Croydon North
