Secrets of the Jobholder’s Pension

David Emery boards his time machine for a preview of the Jobholder’s Pension era.

Department for Work Spokesperson (DFW): Department for Work…. How may I help you?

 David Emery (DE): When am I?

 DLS: 6 April 2014, by the pensions timetable.

 DE: Sorry, did you say Department for Work? I’m looking for the Department for Work AND Pensions.

 DFW: Well, we used to be the Department for Work and Pensions….

 DE: That’s the one….

 DFW: But we became the Department for Work after the glorious Stakeholder Revolution and the public debt crisis.

 DE: Ah yes, I remember it well.

 DFW: You haven’t heard this from me… but rumour is that a fundamental makeover is pending.

 DE: Mum’s the word! Won’t go further than the world wide web, honest!

DFW: We may re-brand ourselves as The Department for Leisuretime and Recreation to resonate with the spirit of   mass unemployment.

DE: Holy hyperdeflation…!

DFW: Never mind! “You looking for pensions? You come de right place!”

DE: What exactly is your function in The Department for… Whatever?

DFW: I’m a senior “jobholder”.

DE: You mean an “employee” ?

DFW: Oh, that is so passé. No one talks about employees these days except as an endangered species. We who are still able to sell our labour for money prefer to be known as jobholders!

DE: I’ll make a note of that.

DFW: There’s a whole new lexicon of jobholder terminology. I’ll see if I can find you a copy of the manual.

DE: I actually came to learn about the new Personal Accounts that are being mooted in my time zone. 

DFW: What you really mean is the Jobholder’s Pension…! 

DE: Right…

DFW: Well, you’re a little bit premature. 

DE: How so? The system was supposed to be fully up to speed by 2014. 

DFW: Well, there are a few operational glitches.

DE: Like? 

DFW: Someone spotted that all the wild proletarian enthusiasm for a Jobholder’s Pension translates into a ton of tax-relief. That’s the problem with simple financial products and auto-enrolment… There’s no disincentive to apply – a classic design fault. 

DE: So when will it be running at full bore, as it were? 

DFW: The official word is 2016. 

DE: I guess I could time-travel through to 2016 right now. 

DFW: Wouldn’t bother. Things will only have moved on by the time you get there. 

DE: Alas. The ancient Ant-in-the-Circle paradox. Incidentally, how did you solve the means-testing conundrum? 

DFW: Don’t ask! 

DE: Well, what was the solution? 

DFW: What part of “don’t ask” do you not understand? 

DE: Okay, okay…. Could I get a copy of the DFW’s Jobholder’s Pension scheme booklet for a working example of a model scheme?

DFW: Are you kidding? We public servants are lumbered with the archaic Timeserver (Defined Benefit) Pension regime.

DE: Lest we forget… 

DFW: We can be cast out on the full pension scrapheap as early as age 60. Now we will have to wait a whole extra year (at least) for our basic state pensions.  

DE: There, there… 

DFW: And all because of a master plan to privatise the State Pension system over the long term. 

DE: The Law of Unintended Consequences can be a real bastard. 

DFW: (Sob) Okay! Is there anything more you want to know? 

DE: Let’s go back to the Personal Account. How does it work? 

DFW: Dead simple! The Personal Account is a special version of the Jobholder’s Pension. Think of it as the Stakeholder of the Jobholder’s Pension.

DE: Ah! The gold standard…. 

DFW: Every employer – or should I say “jobgiver” - must set up a pension scheme for jobholders between the ages of 22 and State Pension Age earning the Primary Income Threshold at least, and who are not already members of a scheme generating minimum benefits. 

DE: Like…? 

DFW: Well, paying benefits of at least 1/120 of “band earnings” for each year of service to a maximum of forty. 

DE: Band earnings? You mean like The Sugababes? 

DFW: Not their earnings…. Your income between certain limits. 

DE: Only joking! 

DFW: Do not take the p***! Anyway, the jobgiver can either set up its own scheme paying at least the minimum benefits or it can install the ready made Personal Account. 

DE: So what’s so special about the Personal Account? 

DFW: Well, it’s m-i–le-s cheaper, because of h-u-g-e economies of scale. The world’s biggest occupational pension scheme, they say. Some upfront costs to get it going, true, but after that it’s plain sailing. 

DE: How much will it cost to set up? 

DFW: About £2bn at last count. 

DE: Chickenfeed! 

DFW: Mind you, the original PADA estimate was £0.5bn, back in 2007. 

DE: Close enough for me… By the way, what is this PADA outfit? Is that the Professional Autograph Dealers Association? 

DFW: Not exactly. 

DE: Anything to do with Parents Against Drug Abuse…?  

DFW: It’s the Personal Accounts Delivery Authority, idiot! 

DE: Okay, okay… So PADA will deliver the Personal Account, will it? 

DFW: Not exactly. It will create the Personal Account delivery infrastructure and then outsource the lot to a private sector partner – perhaps the biggest private-public partnership ever. 

DE: Who are the favourites to get the contract? 

DFW: Currently Great-West Retirement Services Ltd, Logica UK Ltd and Tata Consultancy Services. 

DE: “Tata to Your Pension…” That would make a great logo. 

DFW: I feel that it could count against them. 

DE: And how will this private sector partner deliver the Personal Account? 

DFW: Through e-channels. 

DE: What?

DFW: You know…, the web, e-mail, text messages and “future digital platforms”… 

DE: “Future digital platforms”… The wrinklies will love that. What about complaints handling? 

DFW: Why should there be any complaints? What could possibly go wrong? 

DE: “This is an automatically generated email. Please do not reply as the email address is not monitored for received mail….. Your message is three-millionth in the queue…. Your communication is important to us…” 

DFW: Let’s concentrate on the big picture, please! The real advance is that jobholders can be enrolled automatically in a Jobholder Pension unless they say nay. However, we are banking on some popular resistance to keep the public subsidy down. 

DE: No inertia selling at all, then? 

DFW: Correct! Jobgivers will have to tell their jobholders about the scheme, but we’re hoping that they will highlight the 4% (of band earnings) jobholder’s contribution rather than the 3% jobgiver’s dollop and the 1% from the Government (£3,600 p.a. max in total). 

DE: By the way, where does the company Stakeholder Pension fit in? 

DFW: Sent to the knackers yard in 2012. Mind you, many company Stakeholder schemes ended up as empty shells. 

DE: But what happens if the Jobholding Class… 

DFW: As opposed to the Working Class… 

DE: Precisely… What happens if the Jobholding Class revolts and opts out en masse? 

DFW: Back to shell schemes, I suppose. But at £2bn overheads, a most superior shell. 

DE: Indeed… Dear me, look at the time. I must be heading back to my own era.  

DFW: Yes. You definitely don’t want to miss the next time machine back.  

DE: Goodbye, then, and thanks for your time. 

DFW: My pleasure (Pillock!)