Pensions minister Ros Altmann has quit the government, suggesting “short-term political considerations, exacerbated by the EU referendum, have inhibited good policy-making”.
She has been replaced by former defence minister Penny Mordaunt.
In her resignation letter to new prime minister Theresa May, Altmann (pictured), who became pensions minister after she was made a member of the House of Lords following the Conservative victory in last year’s general election, said she was “at heart a policy expert, rather than a politician”.
“As a minister, I have tried to drive positive long-term changes on pensions from within government and ameliorate some of the past mistakes which I have cautioned against,” she added.
“Unfortunately over the past year, short-term political considerations, exacerbated by the EU referendum, have inhibited good policy-making. As the country heads into uncharted waters, I would urge you and your new team to enable my successor to address some of the major policy reforms that are needed to improve pensions for the future.”
Altmann also called on the May administration to continue to roll out the auto-enrolment programme as well as looking to develop a ‘one nation’ lifetime pension as a means of funding “the crisis in social care funding and help people provide for potential care costs as well”.
She went on to set out three policy proposals under the following headings:
A ‘one-nation’ pension – long overdue reform of pension tax relief: According to Altmann, the “present ineffective and complex” incentive structure for pension saving costs more than £40bn a year and “favours the highest earners disproportionately, while leaving lower earners seriously disadvantaged”.
She said: “We need a radical overhaul of incentives, which can offer more generous help than basic rate tax relief – but as a straightforward government pension contribution for all – and would end the discrimination against Britain’s lowest earners who are forced to pay at least 20% more for their pension than higher-paid workers.” Such a ‘one nation’ pension would see withdrawals taxed in later life, so that people have a behavioural incentive not to spend the money too soon.
A major review of defined benefit pension scheme funding and affordability: Calling for an urgent assessment of the future of defined benefit pension schemes, Altmann said: “Given the risks of diverting corporate resources to one favoured group of workers and the need to ensure adequate resources for younger generations’ pensions, the time is right to properly consider the issues facing employers trying to support defined benefit pension schemes and the potential use of pension assets to boost economic growth.”
Fair treatment for women and better communication on state pensions: On the issue of women’s state pension age, Altmann said that while she respected Parliament’s decision in 2011, she was not convinced the government had “adequately addressed the hardship facing women who have had their state pension age increased at relatively short notice”.
As for the quality of communications when it comes to state pensions, she said: “We must devote resource to widely communicating and publicising the coming changes to state pension age for both men and women.”
Altmann said she stood ready to help her successor and offer her policy expertise and looked forward to continuing to advise on pensions, finance and later life policies from the House of Lords.
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