Tea party victories provide hope for Democrats

The latest primary victories for anti-establishment and Tea Party candidates could give the Democrat

The electoral backlash from US conservatives has intensified, as Tea Party candidates once again confounded commentators by defeating mainstream Republican candidates in the latest round of congressional primaries.

Undoubtedly the biggest upset of the night came from the traditionally-Democrat state of Delaware, where Sarah Palin-endorsed Tea Party candidate Christine O'Donnell defeated long-serving Congressman and former governor Mike Castle to be the Republican candidate for Vice President Joe Biden's former Senate seat.

O'Donnell, who is pro-gun, anti-abortion, fiscally conservative and believes masturbation is a sin, defeated Castle with 53 per cent of the vote. Given that just a week ago O'Donnell was engaged in bitter in-fighting with some of Delaware's elected Republican officials and had been termed "unelectable" by some fellow Republicans, her victory in last night's primary is not only a blow to the GOP, which committed significant resources to the fight in Delaware in an attempt to prevent a repeat of the upset in Alaska, but also adds yet another dimension of unpredictability to the final outcome of November's midterm elections.

The majority of states have now held their primaries. Eight mainstream Republican candidates have been defeated by Tea Party or otherwise right-wing challengers, a number which could rise to nine pending the outcome of the recount in New Hampshire.

The consensus, especially from the left-leaning commentariat, seems to be that while these primary victories for anti-incumbent candidates demonstrate the power and reach of this new right-wing movement, it is very unlikely that any of these challengers will be victorious in the midterms themselves.

In an election season that had otherwise long been considered to be potentially disastrous for the Democrats, with the possibility that the Republicans could regain control of both the House and the Senate, these ultra-conservative candidates represent an opportunity to claw back some momentum in advance of polling day. For instance, Delaware, previously considered to be a serious prospect for the Republicans, is now much more likely to be a hold for the Democrats, especially if their candidate, Chris Coons, is able to capitalise on Christine O'Donnell's unpopularity with a significant faction of Delaware Republicans.

Just as a footnote, it's worth noting that the electoral fortunes of some of these insurgent candidates could have a knock-on effect for Sarah Palin's presidential hopes. Palin notably endorsed Kelly Ayotte in New Hampshire and Carly Fiorina in California, as well as O'Donnell in Delaware. As she is apparently already moving into position for a 2012 campaign, embarrassing defeats for candidates Palin has personally endorsed and campaigned for could dent her appeal to Republicans beyond the confines of the Tea Party movement.

Caroline Crampton is assistant editor of the New Statesman.

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Stability is essential to solve the pension problem

The new chancellor must ensure we have a period of stability for pension policymaking in order for everyone to acclimatise to a new era of personal responsibility in retirement, says 

There was a time when retirement seemed to take care of itself. It was normal to work, retire and then receive the state pension plus a company final salary pension, often a fairly generous figure, which also paid out to a spouse or partner on death.

That normality simply doesn’t exist for most people in 2016. There is much less certainty on what retirement looks like. The genesis of these experiences also starts much earlier. As final salary schemes fall out of favour, the UK is reaching a tipping point where savings in ‘defined contribution’ pension schemes become the most prevalent form of traditional retirement saving.

Saving for a ‘pension’ can mean a multitude of different things and the way your savings are organised can make a big difference to whether or not you are able to do what you planned in your later life – and also how your money is treated once you die.

George Osborne established a place for himself in the canon of personal savings policy through the introduction of ‘freedom and choice’ in pensions in 2015. This changed the rules dramatically, and gave pension income a level of public interest it had never seen before. Effectively the policymakers changed the rules, left the ring and took the ropes with them as we entered a new era of personal responsibility in retirement.

But what difference has that made? Have people changed their plans as a result, and what does 'normal' for retirement income look like now?

Old Mutual Wealth has just released. with YouGov, its third detailed survey of how people in the UK are planning their income needs in retirement. What is becoming clear is that 'normal' looks nothing like it did before. People have adjusted and are operating according to a new normal.

In the new normal, people are reliant on multiple sources of income in retirement, including actively using their home, as more people anticipate downsizing to provide some income. 24 per cent of future retirees have said they would consider releasing value from their home in one way or another.

In the new normal, working beyond your state pension age is no longer seen as drudgery. With increasing longevity, the appeal of keeping busy with work has grown. Almost one-third of future retirees are expecting work to provide some of their income in retirement, with just under half suggesting one of the reasons for doing so would be to maintain social interaction.

The new normal means less binary decision-making. Each choice an individual makes along the way becomes critical, and the answers themselves are less obvious. How do you best invest your savings? Where is the best place for a rainy day fund? How do you want to take income in the future and what happens to your assets when you die?

 An abundance of choices to provide answers to the above questions is good, but too much choice can paralyse decision-making. The new normal requires a plan earlier in life.

All the while, policymakers have continued to give people plenty of things to think about. In the past 12 months alone, the previous chancellor deliberated over whether – and how – to cut pension tax relief for higher earners. The ‘pensions-ISA’ system was mooted as the culmination of a project to hand savers complete control over their retirement savings, while also providing a welcome boost to Treasury coffers in the short term.

During her time as pensions minister, Baroness Altmann voiced her support for the current system of taxing pension income, rather than contributions, indicating a split between the DWP and HM Treasury on the matter. Baroness Altmann’s replacement at the DWP is Richard Harrington. It remains to be seen how much influence he will have and on what side of the camp he sits regarding taxing pensions.

Meanwhile, Philip Hammond has entered the Treasury while our new Prime Minister calls for greater unity. Following a tumultuous time for pensions, a change in tone towards greater unity and cross-department collaboration would be very welcome.

In order for everyone to acclimatise properly to the new normal, the new chancellor should commit to a return to a longer-term, strategic approach to pensions policymaking, enabling all parties, from regulators and providers to customers, to make decisions with confidence that the landscape will not continue to shift as fundamentally as it has in recent times.

Steven Levin is CEO of investment platforms at Old Mutual Wealth.

To view all of Old Mutual Wealth’s retirement reports, visit: www.oldmutualwealth.co.uk/ products-and-investments/ pensions/pensions2015/