November 1, 2001
At the ripe old age of thirty-seven retirement does not feature high on my personal list of priorities. But in my early days as a Member of Parliament the subject of pensions has featured heavily in my political work.
The daily postbag from my constituents rarely fails to include mention somewhere of the Equitable Life problem. It is also very clear that as a nation we are entering a time of difficulty with the potential failure of pension mortgages to cover the full debt on maturity and now many pension companies are reducing their bonus payments across the board.
It seems that the people who chose Equitable Life’s guarantee annuity payments were wise souls but that the insurance company itself was lacking in the same perception as was the Financial Services Authority (FSA). So wisdom is what we need to bring to the Government and the pensions industry.
Our country needs a strong economy with sound finances and it has been very successful in encouraging self-responsibility in pension provision. The savings made by individuals, companies and the pensions industry provide valuable capital for the Stock Market and for this country’s future growth, so we ignore it at our long term peril. The Equitable Life debacle and the potential problems of pension shortfalls need to be addressed and resolved quickly.
This Government spends a lot of time talking about the future, whether it is pensions, the NHS or the Tube, but all too often the results seem disappointing. My namesake on the Labour benches, Frank Field MP, got himself into hot water by trying to drag the pensions issue into the light and was forced to stand down. I have no such position to lose and my great concern is the way we are reducing the importance of pensions provision for young people. Talk to anyone under the age of 40 today and they are putting their money into property because they believe it is the only safe investment they can currently make for their old age. If all our personal wealth was invested in bricks and mortar, in the expectation that property values will continue to rise indefinitely, this country would quickly find itself in an economic minefield.
The Prime Minister understandably has had a busy job in recent weeks on the international front, but back home many feel his Ministers have taken their eye off the problems building up here. Bringing Railtrack into administration may be politically popular, but did anyone in the Government consider what impact this action would have on the current major investors such as our friends, the pension funds. In the end the money for whatever replaces Railtrack will come from us and it is the careful and the responsible among us who will be penalised.
I only got involved in the Equitable Life matter by accident. Immediately after the election one of my constituents, Sir Gordon Downey, who is the leading light in one of the policyholder groups, made contact with me. As luck would have it within a week or two my name appeared in several national newspapers as something of an expert in this area and I was asked to write articles on pensions related policy. Generally over the last couple of decades this country has got it right certainly compared to many of our European neighbours. But the pensions industry needs control and direction because it is the bedrock of all of our futures. I reckon I speak for almost everyone when I say that we need to act soon because the scandals of recent years have undermined public confidence in the whole savings industry.