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Ros Altmann: I want to put things right

Can Ros Altmann really make the pensions system work?

    Minister for Pensions, Baroness Ros Altmann
    Minister for Pensions, Baroness Ros Altmann

    "There is something I very much want to ban". Baroness Ros Altmann of Tottenham (her favourite football team) leans in and fixes me with the kind of steely, determined gaze that I imagine will be familiar to many who have worked with her in Labour and Tory governments.

    ''That awful road sign of pensioners crossing the road with a stick. I hate it! Most people are not old over 60; this is the start of a whole new phase of their life. I want to ban that whole concept of doddery retirement - psychologically, that sign is an image not just to people but their employers, about what the word "old" means. It's wrong.''

    That concept of right and wrong is at the core of the 59-year-old Baroness's identity. In an era of politicians often reticent to spell things out in the way the rest of us might, the Minister for Pensions is reassuringly forthright.

    ''I know how lucky I am to have had a successful career in the private sector [she ran Chase Manhattan Bank's international equity department as well as stints at Rothschild and NatWest] and now to be at the heart of a pensions revolution that I'm determined will make life simpler and more beneficial to everyone. But I'm still a mother, wife, daughter and friend. So I have that connection to people and what drives them, what they fear and how they want to live their lives.

    ''I've always had this sense of right and wrong, that there should be justice. It was instilled in me from an early age. Part of it comes from religion, for sure. But that isn't the only reason I have such moral standards. There's a quote that is always etched on my mind: 'All it takes for evil to triumph is for good men to remain silent.'

    I alerted Blair but sadly the Treasury saw me as the enemy

    ''Much of my family was wiped out in the war, so maybe it stems partly from that. At school (Henrietta Barnett), if someone was being bullied I would try and help them. I would never join the 'in' gang and in the end that got me bullied, too. But I was always looking after people who were being wronged or needed help. Not just people. I used to bring home wounded animals and birds and it would drive my mother crazy.

    "But it always seemed the most normal thing to me, that I must do what I could to put things right.''

    Such earnestness in Westminster is normally the cue for one's inner-cynic alarm to buzz furiously. But Baroness Altmann - brushed off in the past by politicians who feared she'd rock the boat too enthusiastically, and threatened by a pension industry horrified by her attempts to clean it up - has turned herself into a formidable force for ''doing the right thing'', including giving 20 per cent of her salary to charity.

    So it's not surprising that the Prime Minister put her in charge of a chaotic, discredited and mistrusted pensions system to make it fit for generations to come. It's an industry that has grown infuriatingly more complex as successive governments have enabled layer upon layer of schemes, opt-outs, annual assessments, add-ons and a bewildering array of acronyms to turn what should be one of the simplest elements of a working life - you've saved this, we've looked after and added to it, now it's yours - into one of the most incomprehensible.

    Under her guidance, the state pension is taking on a more simplified, corporate approach, while younger generations are being encouraged to save for their later years by being automatically enrolled in a workplace scheme.

    So does a life spent outside government mean she's any better equipped to solve the mess and give people the security in later life that they deserve?

    ''Obviously, things are very different in the ministry than when I worked in the City or was self-employed. Back then, if I wanted to get something done, I got it done. It doesn't work like that in Westminster, which can be frustrating. But I do believe that, if you think something is wrong, you shouldn't be frightened to say so, even in government. There is a moment, of course, when you have to shut up - and I am trying to learn it here. But I'll always have that attitude of wanting to get things done.

    ''My whole life has been spent trying to talk about pensions in layman's language, to use common sense but, when it comes to pensions, most people don't talk in that manner. To me, pensions are about people, not about money. It's people at the end of the day that need to live on a pension. I understand many in the industry think it's about money and profit. But unless you understand the people, you can't serve them properly.

    ''I've got friends who have PhDs who don't understand pensions, which has always astonished me because they're not that complicated. Unfortunately, they've been dressed up in jargon. Because companies selling them had an interest in making it sound complicated so you were willing to pay lots of money to them or to a salesperson.

    "Final-salary schemes devised by actuaries were also complicated and expensive. And because the methodology of state pensions has been based on complex calculations on individual circumstances over each year, things have become mind-bogglingly complicated.

    ''So, from April, there will be just one type of state pension that you build up, regardless of your age, earnings, whether you're on benefits, and so on. Such simplification is quite a challenge to an industry which has not been used to thinking about things in that way. We are moving in a positive direction but sometimes that message gets confused; there's misunderstanding and miscommunication.''

    I assume she's referring to stories that have, in recent weeks, put added strain on her department. Such as those speculating about the abolition of tax relief on money put aside for retirement, and to the 500,000 or so women born in the 1950s who'll be adversely affected by the rising pensions age.

    But she's well used to being in the crossfire. In 2002, she found herself in the centre of another maelstrom when the Wales-based Allied Steel And Wire went into receivership and all those still working lost their pensions in an appalling case of theft.

    It was the moment when she realised the system was fatally flawed and that, like the bullied school-friend in the playground, she had a compulsion to stand up for what was right.

    ''The irony is, of course, that I never wanted to be a campaigner,'' she says. ''It just so happened that because of my expertise in the industry (including time spent at the London School of Economics and Harvard) and the fact that I had advised government on the social aspect of pensions, that, by accident, I became a campaigning person.

    ''I was working with Tony Blair's policy unit at No10 and with Gordon Brown at the Treasury about the investment of pension funds, and protection that was in place for scheme members. I alerted the PM that the new legislation designed to protect members didn't do what it said on the tin.

    ''The Treasury, sadly, considered me the enemy. Then schemes started collapsing and I began speaking to the media about the risks inherent in the system.

    ''And the moment I met those Allied workers, it all hit home. Wonderful people terribly wronged by a pensions system that wasn't safe. People who had hit retirement age and had lost their whole life savings while the company directors, who understood the law and could see what was going to happen, took early retirement, got their pension pots and went on to high-paying jobs.

    ''I assumed I was in a position to help. I understood their grief and how the system failed them. They saw me as a ray of hope, as did many others of similar schemes that were failing at the time. And yet the Treasury wouldn't listen - I was furious with Brown but it wasn't his priority.

    ''When I began highlighting the problem, the pensions industry threatened me. They said I was undermining confidence, bringing the industry into disrepute. One lawyer said to me: 'Listen Ros, they're just the poor bastards it's happening to but most people are fine. Why are you causing trouble?'

    "What an horrendous thing to say. The industry not thinking about people but money. And that made me want to change things for the better. The industry has learned and moved on but things tend to move slowly. I wish it was faster but at least it's in the right direction.'' The simplification of a single state pension represents much of that direction, together with new rules her department has pioneered concerning auto-enrolment.

    From 2018, all employers will have to provide pensions provision for staff aged over 22 and earning more than £10,000 a year. Close to six million employees are already signed up with the opt-out rate of around 10 per cent.

    These changes, she hopes, will encourage Britain to wean itself off debt and instant gratification and once again become a country of savers - like her grandparents, who escaped as refugees from Vienna and opened a little ''Bargain Shop'' at the front of their house in Hale.

    The Baroness's reforms are a type of behavioural economics - people know they should be saving, so, by auto-enrolling, the industry helps people not with a stick but a carrot.

    ''I was brought up to think for myself and that's reflected in the kind of work we're doing here. My father, a dentist, wasn't religious but my mother went to shul every week and they taught me to think for myself, to make my own mistakes and not to follow the herd. Not to hold grudges, listen to others' points of view and always put myself in someone else's shoes. That way I would do the best for myself.''

    A message that she's passed on to her own children – she and her husband Paul, a management consultant, have three grown-up children, live in North London and are members of Kinloss Synagogue.

    Putting herself in someone else's shoes is also reflected in her championing of Britain's more mature workforce - crossing the road not with a walking stick but a swagger.

    ''One of my big passions is to help people understand the value of later-life working. Not just to employers who can benefit from the life experience and wisdom of such workers. But it's also good for those individuals and the economy - they're working, earning, saving and contributing. Retirement then becomes a productive process, not a sudden moment.''

    What makes Rosalind Altmann such an enjoyable interview for someone like me, who tends to glass over when pensions are mentioned, is that she speaks about people rather than things and systems. She even at one point implores me to ''think of a pension with warmth, it is yours after all''.

    A few hours after we meet, an aide asks whether I want more technical details about the auto-enrolment thingy because, as you'll notice from this article, I didn't ask too many questions about boring policy issues. Which demonstrates precisely why she's such an asset to a department in some turmoil over how effective it currently is at getting the core messages across. She knows better than anyone that, rather than being a ''thing'', a pension is in fact an extension of ourselves.

    The information needs to be personalised, something she's rather good at. ''That's where I come from, the people, not the system,'' she concludes. And one's left feeling that, unlike much of what the government's career politicians try to nanny us about, if Ros says it's a good idea, then it probably is.

    So, designers of road signs, will you rise to the challenge?

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