Lord Turner's Pensions Commission apparently caused the biggest row between Tony Blair and Gordon Brown. Blair backed Turner and won that fight, and now the coalition has swung behind the reforms too.
Today the DWP published the result of an independent review of the workplace pension reforms recommended by the Pensions Commission, due to start in 2012.
Labour left behind legislation that would have made employers automatically enrol most of their staff into a pension scheme from 2012 and make pension contributions for them. To remedy the failure of the pensions industry to provide suitable low cost pensions for low to moderate earners and the staff of small businesses, a new trust-based low cost pension scheme, now called NEST was set up.
Former ministers and DWP officials did much to create a consensus around their plans, including reaching out to the then opposition parties. The new government accepted the principle of auto-enrolment in the coalition agreement, but also contains critics of the proposals. Ministers set up an independent review – ominously omitting any union or consumer representative – to look at the detail.
This unleashed a strong campaign to undermine the 2012 settlement. The Treasury has never been keen, because millions of extra savers will need tax relief on their savings. Small business lobbyists have argued that their staff should be exempt. Section of the pensions industry have always been hostile to NEST as they rightly worry a good low-cost scheme may expose more expensive schemes elsewhere. Critics have exaggerated the problems caused by small auto-enrolment pensions eating into means-tested benefits, and called for older workers not to be auto-enrolled.
Progressive pension campaigners will therefore be mightily relieved today that the review's recommendations – accepted by the government – maintain the main planks of the settlement. Importantly it still adds up to a new pensions system because everyone at work – whether they work for a large or small employer and however old – will be covered.
The review has recognised that while much of the industry may be instinctively suspicious of a state sponsored scheme muscling in on their territory, pensions companies do not want to take on providing pensions for every employer however small and disorganised, and every worker however little they are paid and broken their employment record.
Indeed the review accepts in general terms the call from the TUC to end some of the red tape imposed on NEST by industry lobbying. They agree with us that an annual cap on how much you save is expensive to administer and makes no sense for savers. Similarly they think that like other DC pension schemes, people should be able to transfer pension pots in and out of NEST.
But it is not all good news from a TUC perspective. Staff will now have to wait three months before they are auto-enrolled, and the earnings threshold that triggers auto-enrolment has been raised by £2,000 to the income tax personal allowance of £7,475 and linked to it in future. (However contributions will still be paid from the old threshold set at the low limit for the band of earnings on which employers and employees will make contributions.)
This will hit part-time women workers in particular, the most under-pensioned group in the workforce, and is very disappointing.
So while the review does move backwards on some issues it is so much better than it could have been; the glass is more than half-full today.
Even with the setbacks in the review, this is a long fought for historic advance for union campaigning. From 2012 most workers won't just be eligible for a minimum wage, but a minimum pension contribution too.
It might not be very big – and we will certainly argue over time that contributions should rise – but Lord Turner was right to recommend auto-enrolment and employer compulsion in his review, and with pension provision collapsing in the private sector so that just one in three workers gets any employer pension help it is even more necessary today.
Nigel Stanley is head of campaigns and communication at the Trades Union Congress
