Third time lucky: building a progressive pensions consensus

[Co-authored with Nigel Stanley] My Touchstone Extra essay on the progressive potential of the third consensus in post-war UK pensions policy.

Our belief is that the UK is now entering a period of a new pensions consensus – the third since the modern welfare state was established after the Second World War. Building this new consensus started with the recognition by the last government that our pensions system was breaking down, and that we needed to make changes. The Prime Minister set up the three-member Pensions Commission chaired by Adair (now Lord) Turner, with trade unionist Jeannie (now Baroness) Drake and academic John Hills as its other members.

Its report has since formed the basis of a series of pension reforms taken forward by both the previous and present governments. There is general acceptance that employers should have a legal obligation to enrol their staff and contribute into a decent pension scheme, and that it should not be left to individuals to make complex decisions about retirement planning. The Commission also outlined plans to simplify and increase the level of state pensions, to provide a solid platform for private saving, eliminate means-testing and move towards flat-rate state pension provision. The coalition government has gone further than the Commission anticipated in this regard by proposing a ‘single-tier’ state pension implemented from 2016.

For the most part, this adds up to progressive change – by no means perfect, but much better than what went before. Importantly these reforms also have a good chance of sticking, because they have achieved a wide degree of consensus across political parties and among the various pension interest groups. Unions played a significant part in first establishing that change was needed, and shaping the policies that emerged. We are proud of that role, if far from complacent about the need for further progress.

Consensus has secured agreement about the basic architecture of the pensions system. But there is still much to do to make it a reality and important ways that it can be made better within the structures and approach set by the Pensions Commission. This Touchstone Extra is an attempt to outline the shape of the new pensions consensus and the issues that trade unionists and others who share our desire to build a decent, comprehensive pensions system need to consider if we want to shape it in a positive direction for the future.

Click here to access the full document.

Image: TUC

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