Facing up to pensions crisis

The issue of pensions was omitted from the Deputy Prime Minister's lengthy list. It was an unfortunate oversight, even more so given that the coalition agreement between the Tories and Liberal Democrats made only scant reference to this subject with some bland platitudes.

Yet the reason that pensions policy is in crisis, with a black hole of up to 2bn at some of Yorkshire's major employers, is because the last government failed to take a long-term view.

Indeed, New Labour's culpability is perfectly illustrated by Tony Blair's memoirs which reveal, scandalously, how Chancellor Gordon Brown tried to derail Lord Turner's pension reforms – a report that was supposed to lead to a definitive pensions policy once and for all – by threatening to bring down the then PM over the loans for peerages scandal.

Their power struggle diverted attention from building a policy consensus that will stand the test of time, and which actually encourages workers, and their employers, to make appropriate provision for the future.

So far, the coalition, like its predecessor, is committed to raising the retirement age. While this might make a marginal difference to the budget shortfall, it still leaves public and private sector organisations with obligations that they simply cannot afford unless they change terms and conditions – as with the winding up of final-salary schemes – or defer possible pay increases.

It is a conundrum that Ministers cannot afford to ignore. For, while public sector grandees and politicians appear well served by the current impasse, it is doing nothing to help everyone on low or modest incomes who are discovering that their pension entitlements are inadequate – and that their political leaders are, once again, being slow to rise to the challenge.