Pensions simplification 2005: Interview with NAPF’s director of policy, Joanne Segars

There is a banging coming from downstairs. It is loud and repetitive. While there are no signs that a group of angry workers are starting to attack the National Association of Pensions Funds’ (NAPF) Westminster offices, the noise draws parallels to the struggle faced by the NAPF’s director of policy Joanne Segars.

She believes the time has come to reconstruct pensions through simplification; that is to simplify the process for saving for retirement in the UK through a series of high profile pieces of legislation. The text of these gargantuan laws is currently in a ring-bound folder on Segars’ desk, ready to be studied. Amid these imposing looking tomes, she remains upbeat.

"Now is a good time, not to start from scratch, but to have some sort of fundamental reform of the system," she says.

During her twenty years in the pensions industry, she accepts that there have been previous attempts to sort out the crisis that is currently getting as many column inches as musician-come-anti-poverty-crusader Sir Bob Geldof, but those have failed.

"There’s been millions of reviews and reports, but what seems special about now is that we have the opportunity, through the Pensions Act 2004 and the Finance Act 2004, to simplify some of the infrastructure. There is this real push and pressure to really have some root and branch reform of the pensions system."

She believes that the main reason the system is in such a state of disrepair is that it is too complex. "The system’s far too complicated for any ordinary person to understand."

This is compounded by the fact that, at the same time, a declining state pension will mean a large proportion of the UK population will be forced to retire on means-tested benefits. But the unhappy tale doesn’t stop there.

"On top of that, we have a private pension system that is so weighed down with regulation that if you ask employers and sponsors to run and commit to it, in addition to longevity adding to scheme costs, it’s very difficult."

She hopes that the new legislation will go some way to making it easier for employees to save for retirement, but there are still some hurdles that need jumping. "Tax simplification will hopefully make it easier for people to save more flexibly. [But] while our members who are at the coal face running pensions can say tax simplification is all fine and dandy, there is a hell of a lot of legislation that goes along with that. The soundbite is nice and simple but it is also very complex."

She adds that the UK’s 100-year-old system of occupational pension schemes comes with a lot of baggage. "You’d be hard pressed to find too many people against the principles of the legislation, but we are partly bedevilled by history. There are schemes and systems set up in the 1960s that still have people contributing and there is a contract; and the insurer and the individual are bound by the contract. You are all the time trying to have this brave new world but retro-fitting it around what’s gone on in the past."

Segars believes that the publicity and the high profile nature of pensions simplification will help cut the layer cake of regulation. "With the Pensions Commission, we’ve got a golden opportunity. And hopefully with a high profile minister like David Blunkett at the Department for Work and Pensions, we really will be able to have pensions reform that lasts, because [constantly changing legislation has] been the cause of lots of our problems. [Hopefully the Pensions Commission] once-and-for-all will sort out all of the problems that we’ve got."

But this big message must not overshadow work that is currently being done by employers to help employees value their pensions. "On the one hand we are dealing with these mega issues – ‘What is the future of pensions in the UK?’ – and at the same time, helping out members with the day-to-day business of running the pension schemes they’ve currently got."

The incoming pensions changes should encourage employers and workers alike to think more about retirement. "The tax simplification rules where you can accrue £1.5m over a lifetime means that as a consumer, whether I want to save in my pension or put my money into an Isa and then eventually roll my money into my pension, the new rules give me the flexibility to do that."

Simplification may lead to a number of organisations coming up with novel ways to help staff save. "We might see more flexibility on that side if we get further reviews of the savings regime. So [for instance] if it was possible for an employer to put money into Isas, at the moment that would be a taxable benefit-in-kind, [which] would put things in a very different perspective."

Salary sacrifice pension arrangements have already taken off as more employers use the legislation as a springboard to come up with revamped occupational pension plans. Organisations are queueing up for the chance to save significant sums through National Insurance savings, with many then using these to plug deficits or increase contribution rates.

"It will be more flexible and the idea that people just save for retirement through these things called pensions [will no longer exist]. Pensions will still play a part of it, but that won’t be the only way people save. There will be challenges to look at new kinds of products or new kinds of opportunities through the workplace to really help people save for retirement."

A large part of the process will be communicating these ideas to a turned-off workforce. But she notes that it is a positive sign that a whole industry has been built up around pension scheme communication.

"Clearly in terms of getting people into pensions, we need to find a new lexicon, a new way of selling saving for retirement. One way you do that is by getting rid of the ‘p’ word; a pension is something your granny buys."

The last major shake-up of the pensions industry occurred in 2001 when new legislation meant that any employer with more than five employees had to offer a stakeholder pension arrangement. Segars was at the Trades Union Congress when this was being introduced, and was involved in setting up such a scheme herself (she is currently a trustee of a stakeholder scheme and a former trustee of a defined benefit plan). However she is loathe to draw any comparisons between that legislation and simplification’s more recent changes.

"Stakeholder pensions had a different purpose; trying to fill gaps in terms of pensions coverage. Clearly they haven’t done that or fulfilled their potential. This is much more about getting the structure of what is there right and joining up the different blocks, having some sort of cohesion between personal pensions, stakeholder pensions, occupational defined contribution and defined benefit. It serves a rather different purpose."

The next step is watching how organisations cope with the changes and guiding them through any further quagmires. "We need guidance from HM Revenue & Customs on the details and it’s important that the people running pension schemes, be they HR managers or pension fund administrators, know as early as possible what it is they need to do. At the moment, everyone is dealing with all of the regulations coming out. Come back and ask in a year’s time, we’ll know how well it’s bedded down and what the knock-on effect has been."

The times may be a-changing, but Segars, along with her NAPF colleagues, will be at the frontline of the battle for a while yet.

She concludes: "If I had a pound for every time someone said ‘if only we were starting afresh, wouldn’t life be a lot easier?’ I could probably afford to retire."


Starting as a pensions journalist for Incomes Data Services, Joanne Segars decided to swap the role of roving reporter for that of pension specialist for the Trades Union Congress (TUC). "I was there [through] quite an interesting time; personal pensions mis-selling [and] Maxwell."

Following her stint as a trade unionist, she decided to move to the Association of British Insurers (ABI). She says that while at the TUC she spent a lot of time hitting the insurance industry over the head, only to become their industry voice.

Segar’s next stop, and current home, was as director of policy at the National Association of Pension Funds (NAPF). As a result, she is now helping both employers and pension providers boost retirement saving.

Joanne Segars admits that her career path has not been the most obvious. But she does think that her last three employers, the TUC, ABI and NAPF, have more in common than many would first imagine. "[They’re] just at different ends of the telescope. The issues are the same, but you are just looking at it from a different perspective. All three want a better state pension to build a bigger and better private pension system."