(March 13, 2012) — Ask the man on the street in the United Kingdom about his feelings towards politicians and the answer is usually the same as he feels about his pension. Clue: It is not complimentary.
After years of economic woe, expenses scandals, and marches on Parliament over cuts to pensions and other benefits, confidence in the UK’s ruling elite is about as low as is it is in the financial system.
A breath of fresh air to blow away the cynicism could come in the form of Gregg McClymont, Member of Parliament for Cumbernauld, Kilsyth and Kirkintilloch East.
McClymont, 36, was newly elected at the 2010 election and as a Labour Party MP sits on the opposition benches as Shadow Minister for Pensions. His job is to watch and question the government on their decisions and tactics, and challenge for balance in any new legislation.
After 16 years in the top flight of academia – he most recently taught history at St Hugh’s College, Oxford – McClymont decided to leave the books behind and make a difference more directly.
“I’ve always had strong views on how I’d see the country prosper and what is a meatier role than pensions?” he says.
The straight-talking Scott (his constituency is at the very northern edge of Glasgow) is more worried than most about the UK’s pensions problem.
“It is not a time bomb yet, as we are still moving slowly, but the pensions problem is one of the largest the country faces,” he says.
In the atrium of Portcullis House, a stunning architect-designed home for MPs that overlooks the Thames and the Houses of Parliament, we chat about what is on the pension agenda.
“We are not opposing the government just for the sake of opposing – where we think the government is right, we will offer our support.
“All eyes are on the Chancellor next week and whether the £140 a week for the state pension appears. If it does, we have to analyse just what has been announced, if it doesn’t we have a bit of a problem as the government is using that as a platform upon which all its other reforms are based.”
The state pension is just part of the problem, however.
“The government has said it wants to reinvigorate saving into pensions, and we have to give it time,” his tone indicates that he’s not seen a lot happening so far. The pushback of the date for the start of auto-enrolment into work-based pension schemes at the end of last year has not done much to reinforce the idea that the government is desperate to get the country saving.
“Steve Webb [Pensions Minister] has announced a system of ‘defined aspiration’ that would try to find a way for risk to be shared more equally – not just by the employer or the employee.
“Aggregating pension pots and the cost involved for members is something that has to be addressed too.”
After less than six months in the job – he took over from Rachel Reeve, in October – McClymont seems to have figured out the main points. Without a pensions background, he says his job is to know enough of the detail to make judgements on policy.
“There are thousands of pension funds – many more than elsewhere in Europe – and they are not able to take advantage of the economies of scale and buying power. The idea of the ‘Supertrust’ being launched by the National Association of Pension Funds is a good one. It’s the obvious way to try and improve bargaining power.”
He says a good starting point would be to start ‘scaling up’ or clubbing together smaller schemes and unlike many in the pensions industry, McClymont is not (yet) war-weary.
“We know from history that employers want to provide good retirement income for their workers, but for reasons often beyond their control – such as regulation and what happens in stock markets – defined benefit schemes have mostly been closed in this country.”
Unlike many politicians, he seems to genuinely have the country’s interest at heart, and not that of the party, but he says, there increasingly are more like him.
“A Tory MP, from Warrington South has called for restrictions on the National Employees Saving Trust [the new government-backed, occupational pension scheme for low-paid workers] to be lifted and let it work on a level playing field rather than work through government intervention. This does not sound like the usual Tory line.”
The call was to let this government-backed scheme compete on fees to allow pension members the best possible deal.
He says that if MPs for the party in government are sticking their neck out on an issue, then it must be time for change.
There are other issues, such as the government-backed push for infrastructure investment by pension schemes – “£2 billion is a good start, but it’s a long way off what the Chancellor planned…we need a clearer policy framework so pension funds are sure it’s for the long haul…” – that McClymont wants to tackle, and that will come in time, but for the moment something else takes precedent.
“Tax credits. I’ve a meeting about tax credits now.”
Clearly, this does not fire up his passion as much as avoiding the country falling into destitution in 30 years’ time.
This year he was compere for one of the nights at ‘Pensions Rocks’ – the annual Battle of the Bands competition run (and participated in) by pension funds, asset managers, actuaries and consultants – anyone dedicating their time to such an event is keen on pensions (full disclosure – the writer of this article was a judge at the event).
But, as for many of us, tax is part of the day job.