Arab Spring: from instability to progress

It’s time to re-write the rule book.

Authoritarian dictators may have ensured stability, via repression, trhoughout the countries of the Middle East and North Africa for the past 40 years - while the oil-hunger countries of the world watched - but it is mass instability that is now bringing rapid progress to the region. From the whirlwind of the Arab Spring - from street protests, to uprisings, to revolutions and civil war - we are seeing how instability is delivering seismic shifts and progress to the political, economic and social landscapes of Arab countries. And, it's happening within seasons, not decades, fuelled by the aspirations of its people.

Democracy takes time, granted, and how you get there has long been documented but what is happening in the Arab Spring can not easily be labelled, and no pre-packaged 'long-term strategy' readily applied. Its pace and unpredictability are its assets, which also mean it is impossible to judge the next step.

Instability can reduce confidence, breed doubt and panic - in Europe we currently fear Euro-contagion and a 'double dip' which has sent our markets reeling and gold bullion peaking. Similarly, some Arab countries are miscalculating their moves and imposing irrational policies to try and stabilise their countries while others are already planning elections, signing huge international investment deals and bringing together tribes and dissidents who have long been left out in the cold - and in many cases countries are doing both.

Indeed, many Arab countries will take two steps forward and one step back, and some will even resist change while also trying to introduce reform, as they learn how to read and respond to the 'Arab street'.

This past 10 days we have seen a plethora of such changes from Mahmoud Abbas submitting the UN bid for Palestine and boldly declaring that the Arab Spring has arrived in Jerusalem, to King Abdullah of Saudi Arabia's incremental yet still unprecedented moves in giving women the vote in 2015 and revoking the sentence to lash a woman for driving her own car, Qatar continues its support for Arab nationalist uprisings - financially and militarily - by committing $0.5bn in development loans to Tunisia while at the same time accepting the resignation of the brains behind the rise of Al Jazeera, Waddah Khanfar, and replacing him with a Qatari royal, to the surprise return of President Saleh to Yemen and Turkey imposing an arms embargo on Syria while hosting opposition figures in Ankara.

The Arab Spring has reminded us all, including strategists who write 'five-year plans on progress and stability' and dictatorships that try to hold to power, that once in a while a black swan comes along, enabling incredible progress to be made even in the most unlikely of places, where instability can sometimes be a force for good and not knowing what the next move is, becomes your most an invaluable asset.

And, when that 'place' is an entire region of hundreds of millions of people - many who are under the age of 30 - who share a language, a culture, a hunger for change and progress, and a desire to achieve their aspirations, then it is time to re-write the rule book on 'how to deliver progressive change, equality and rights'. There are rumours that the Nobel committee will award this year's Nobel Peace Prize to the main actors in the Arab Spring, which would be consistent with having awarded it to John Hume and David Trimble previously. No one saw that coming either.



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/