Briefings without Bias?
18 July 2016
In departing, Ros Altmann took the opportunity to comment that “short-term political considerations, exacerbated by the EU referendum, have inhibited good policymaking.”
If you read my piece last week “The Perils of Poor Policy Process Risk” it won’t surprise you that I agree with her that political short-termism causes problems in pensions; it most certainly does.
Ros Altmann and Steve Webb before her had extensive knowledge of pensions. I think it’s safe to say that there is no reason to think our new Pensions Minister, Penny Mordaunt has any detailed knowledge of pensions.
This is not meant in any way as a criticism of her or those that have appointed her and I do not think this ought to be a problem at all, in theory, because many Ministers without subject matter expertise go on to do a sensational job and fingers crossed that is exactly what Penny Mordaunt will go on to now do.
However, I think it may well be a problem in practice, for a specific reason: to my mind whether having a Pensions Minister with relatively little subject-matter expertise or not is a problem depends mainly on how that Minister gets briefed by those around her who are, in effect, her incumbent advisers.
And on that front and without wanting in any way to personalise the situation I think there is a huge risk, right here, right now. I’ll call that risk “Incumbent Advisers Bias Risk” and what I mean is this:
The DWP, TPR and the Treasury have a hugely important part to play in fully and objectively briefing the new Pensions Minister and if that new Minister has relatively little subject matter expertise then their briefings will be even more important.
The problem is that on the basis that we are all human beings we are prone to all kinds of behavioral biases, so will there be an entirely natural tendency for the DWP, TPR and Treasury briefings that our new Pensions Minister will be receiving to lack completeness and objectivity? – directly because of a range of behavioural biases, particularly the very well documented bias of Group Think.
If so, is there a risk that following her Departmental Briefings our new Pensions Minister will incorrectly be left with the impression that:
- AE is a success to date; despite the fact that there is at least one research exercise completed suggesting one in four of all the employers that have staged so far have made serious errors that will be lead to financial detriment for their Workers?
- The AE Workie advertising campaign makes sense; despite the fact that many market participants remain concerned that it transmits an entirely inappropriate and completely counter-productive ‘soft and fluffy’ message
- AE is straightforward enough for employers to safely stage successfully without any advice at all; despite the fact that the vast majority of AE implementation experts supporting employers ‘in the front line’ feel very differently. Yes, an employer can do AE all by themselves in the same way that you can cut your own hair if you really want to; but you’d probably make a complete mess of it.
- It is sensible for the main success/fail statistical analysis relating to AE to be based on Employers completing a Declaration of Compliance; despite the fact that not all Declarations of Compliance are scrutinized, which is as inappropriate from a governance point of as it would be if motorists were allowed to MOT their own cars.
- The funding and debt repayment strategy for NEST is all AOK; despite the fact that there are many unanswered questions on that front
- AE is no more complicated than it needs to be; despite that fact that many in the industry believe it to be riddled with ‘unrewarded complexity’ i.e. complexity that doesn’t deliver any real value to anybody
- There is no need for the Government to encourage the widespread use of a free and open data standard; despite the fact that not having one means we have an unacceptably high data risk, that the costs of implementing the Government’s AE policy is needlessly high and that Employers are spending much more time on AE than they ought to be
- That employers can safely and sensibly select a suitable pension scheme; despite the fact that there are real concerns about some pension products on the market, and that the Relief at Source v Net Pay issue alone may well result in yet another miss-selling scandal
- All pensions policy is harmonised; despite the fact that the confluence of AE, Pension Freedoms and the Lifetime ISA seem to many to be pulling policy in completely different directions; and that there exists enormous policy tension between DWP/TPR’s apparent ‘long term prudence on pensions’ intended direction of travel and the Treasury’s apparent ‘let’s fix the fiscals first’ intended direction of travel.
So the question is this:
What will our new Pensions Minister do to ensure she obtains an objective, balanced, rounded and complete view of the many pension issues she is now faced with and that she is now responsible for handling?
Ideally, I think our new Pensions Minister should quickly engage with the many and varied professional associations, trade bodies and communities including of course the CIPP and the CIPP’s Friends of AE, and the many and varied market participants, and the many and varied employers, so that she can talk to a broad range of people including of course the many pensions and payroll professionals out there who’ll want to (and deserve to have the chance to) ‘tell it as it actually is’.
This will help her to build her own robust platform of knowledge, understanding and insight that will, I hope, lead to a very long and successful tenure as Pensions Minister.
Finally, I have a hunch and it’s no more than that and I certainly don’t have any knowledge that the rest of the market has. My hunch is that our new Pension Minister’s tenure as Pension Minister will be positively correlated with how well she is briefed in the weeks ahead. Think about it…
Founding Chair, Friends of AE. www.friendsofae.org.uk
Founding Chair, Friends of AMNT. www.amnt.org
Founding Chair, Transparency Task Force. www.transparencytaskforce.org
Governor, Pensions Policy Institute www.pensionspolicyinstitute.org.uk
Chair, Pensions BIB
m: 07501 460308