European ambassadors feared Iranian lock-in

WikiLeaks exposes officials’ worries of being trapped at Ahmadinejad’s inauguration.

It appears that tactically thwarting Iran's nuclear ambitions is not the only concern on the mind of state representatives in managing relations with the Persian nation. A document from the WikiLeaks batch of US cables, dated July 2009, exposes the back-room politics of EU diplomats as they prepared to attend the inauguration of Iran's president, Mahmoud Ahmadinejad.

Although prepared to send ambassadors to the ceremony in the Iranian parliament, member states had reportedly agreed to a secret caveat that would see them walk out if the leader crossed the "Durban Red Lines". Any denial of the Holocaust or threats against the State of Israel would trigger leaders' exit from the ceremony.

Despite their best intentions, the leak exposes the concern of members regarding the plan's practicality. Never having entered the building in Tehran where the event was to take place, attendants feared that their lack of territorial knowledge might prevent them from staging a successful escape.

Though threatened by seating layouts, floor plans and aisle widths, diplomats' greatest fear is said to have been the danger that the Iranians would simply lock them in:

They are not sure how they will stage their walkout, logistically, should they need to do so. They are worried that the doors may be locked.

Officials presumably felt that Iran might take its cue from China, who used the "locked-door" tactic to great effect in 2005. After facing hostile questions at a Beijing news conference, President George W Bush attempted to make a hasty exit from the room, only to find his way blocked. His shock and embarrassment at being held awkwardly in the conference has been replayed millions of times online.

The threat of viral videos exposing a stalled diplomatic stampede at the doors of the Iranian parliament would be enough to scare even the most seasoned ambassador. International relations can be a dangerous battlefield, and it is the responsibility of any serious professional to plan not only his strategies, but also his exits.

Show Hide image

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: products-and-investments/ pensions/pensions2015/