Ros Altmann resigns as pensions minister
Baroness Ros Altmann has formally resigned from her position as pensions minister which she has held since May 2015.
The former pensions campaigner said her decision would leave her to “speak freely at this dreadfully difficult time for our country”.
In her letter to the new Prime Minister Theresa May, Ms Altmann said that while she has been honoured to serve in government, she was not a politician:
“As an economist and investment professional who has been involved in all aspects of pensions for nearly 40 years, I am at heart a policy expert, rather than a politician. I have spent my entire career trying to help as many people as possible enjoy better later life incomes, encouraging consumer protection and social justice.”
She added: “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. 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.”
Her proposals include:
- an overhaul of the tax relief on pensions, which she described as “ineffective and complex”
- a review of defined benefit pension scheme funding and affordability
- fairer treatment for women, and
- better communication on state pension changes.
“Women not adequately informed about state pension age”
She said: “On the issue of women's state pension age, whilst I respect the democratic decision taken in 2011 by our Parliament, I am not convinced the government adequately addressed the hardship facing women who have had their state pension age increased at relatively short notice. They were not adequately informed. I also believe we must devote resource to widely communicating and publicising the coming changes to state pension age for both men and women.”
Following her appointment as pensions minister, Ms Altmann had been widely criticised for not protecting the interests of the women born in the 1950s who have seen rapid increases to the state pension age – a cause she had previously stood up for.
- Earlier this year, Moneywise looked at how the state pension changes were causing hardship for many women in the run up to retirement.
Commenting on Ms Altmann’s decision, Steve Webb, former pensions minister and now director of retirement policy said her yet to be announced replacement would have a challenge on their hands. “The new minister takes over at a time when there is much to be done in the world of pensions. Millions of workers are yet to be automatically enrolled and millions more are not saving enough for their retirement. We need an end to tax relief being seen as an annual 'piggy bank' to be raided by cash-strapped Chancellors. And we need a coherent policy between Treasury and DWP, not least when it comes to pensions and Isas. Let us hope that the new ministerial team will have a long tenure and that we will not see a return to the revolving ministerial door that we have seen in the past.”
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
Defined benefit pension
Often referred to as a “final salary” pension, benefits paid in retirement are known in advance and are “defined” when the employee joins the scheme. Benefits are based on the employee’s salary history and length of service rather than on investment returns. The risk is with the employer because, as long as the employee contributes a fixed percentage of salary every month, all costs of meeting the defined benefits are the responsibility of the employer. (See also Final Salary).