Just over a year ago, Guy Opperman was appointed pensions and financial inclusion minister, a post he says he “pitched for” and “really enjoys”.
He took over the post at a pivotal time for pensions policy; auto-enrolment (AE) was in its final steps of staging and the statutory review was on the way; the defined benefit (DB) green paper had not long been released; and the fallout from the collapse of BHS was continuing.
He is aware of the momentous tasks he was set, and notes he has had three key priorities since the start of his tenure: ensuring AE continues to roll out successfully, the creation of a single financial guidance body, and, getting the ball rolling on DB reform.
First year
With Opperman and the Department for Work and Pensions (DWP) committed to a broad swathe of work, it may be difficult to pinpoint exactly what he is proudest of. It is not, perhaps, what you might expect – AE.
Instead, in his own words, the question provokes a “suitably self-deprecating answer”.
“It is getting to a situation where I believe there is cross-party consensus to the majority of the issues that are in this portfolio,” he says. “I am absolutely persuaded that longstanding pension reform and changes only really work when all political parties broadly get behind the policies.
“I will always stick up for the government and the Conservative party but you need to take the politics out of any pensions issue.”
This will likely be welcome to many who have lamented what is a somewhat shapeshifting post. Since the 2015 general election, there have been three junior ministers with responsibility for pensions. The role itself has also transformed since 1998 when the post was titled welfare reform.
Opperman recognises this, noting that, with AE in particular, he is the “merely the latest in the long line of ministers of various political persuasions who have shepherded and guided this particular policy on its journey”.
Policy creation
This cross-party collaboration is vital to ensuring sustainable policies are reached, he says, and this theme will continue through upcoming DB policy creation.
Opperman extols the virtues of his “very positive working relationship” with other political parties on AE and the upcoming single financial guidance body, and hopes this continues.
“While, the DB white paper is out for consultation, again we are going to need to do that on a collective basis so that parliament as a whole – representing all spectrums of society and all political views – comes up with a reasonable and sustainable solution that supports businesses and allows them to thrive and survive, but also preserves and protects members.”
This consensus is not the sole ingredient of policy formulation, however, and Opperman is keen to stress that consultation is also being taken very seriously.
“It’s not right for me to come in with a predetermined view; that’s exactly the opposite of having a consultation,” he says. “What I want to do is consult and try to get the right balance between member protection in the longer term and having the appropriate fines and penalties for those who transgress.
“It’s going to be the best part of a year before we have a statute so there is plenty of time to consult, listen and learn.”
The DWP last week launched its first consultation following the DB white paper, asking the industry for views on the future of The Pensions Regulator’s powers, including punitive fines up to £1m.
Consultation is in the pipeline for other areas of the white paper, including consolidation, although “we’re expediting the process to the best of our ability”, Opperman stresses.
AE successes
Perhaps the biggest – and most tangible – policy Opperman has had to deal with is AE. When he took office, staging was concluding and the first contribution rate rise was looming.
To Opperman: “AE is one of the great success stories of successive governments” and, while staging has now concluded, he continues to hope of bringing more people into workplace pensions.
“I hope so,” Opperman says, when asked if there will be an influx of members from the gig economy following recent rulings against Pimlico Plumbers and Hermes (the courier).
At the same time, the government appears to have effectively mitigated worries that the April 2018 rise in contributions would cause a surge in opt-outs or cessations.
Thanks to other household finance policies including the increase in the personal tax allowance and the living wage, and the provision of free childcare, people have seen an “enhancement of their earnings” that has granted a “net benefit in the longer term”, offsetting the diversion of income now to income at retirement.
“Less than one percentage point dropout rate as compared to the previous rate is the preliminary indication,” he says. “It’s a phenomenally successful situation. If there was the same next April, I would be delighted.”
Official statistics are not due out until roughly August, but these indications will help to alleviate industry concerns.
Opperman’s first year in office has no doubt been packed and the next couple of years seem set to continue that trend. His ethos certainly is orientated towards considered policy creation based on consensus and industry consultation, something that will no doubt be welcomed.