Morning Call: pick of the papers

The ten must-read pieces from this morning's newspapers.

1. It's welfare, not wealth, that will define Ed Miliband's leadership (Daily Telegraph)

Labour's reluctance to stand up for those in greatest need leaves it in no man's land, says Mary Riddell.

2. Welfare cap: it's not about the money (Guardian)

Gavin Poole argues that opponents of the cap on benefits fail to see that it will raise self-esteem and break the cycle of poverty.

3. NHS reform should be dropped, before it's too late (Independent)

Steve Richards says that "sweeping upheaval" is a polite way of expressing the chaos that is being imposed.

4. Barack Obama has reasons to smile again (Daily Telegraph)

The president's future looks more hopeful, says Alex Spillius -- the US economy is recovering, Republicans are weak and he is untainted by scandal.

5. The real debate that America needs (Financial Times)

Romney and Obama are the men to set the agenda, says Gideon Rachman.

6.For Greece default is the only option (Guardian)

Costas Lapavitsas says that the dreadful debt saga will only come to a close when Greece takes charge of its predicament.

7. We want a deal with Iran, not a war (Independent)

The EU decision yesterday to ban imports of Iranian oil makes even more perilous a confrontation that could yet lead to war, warns this leading article.

8. Economic uncertainty is no excuse for inaction (Financial Times)

Increasing demand is the way back to economic health, writes Lawrence Summers.

9. Hockney's painted message for the politicos (Times) (£)

Britain's greatest living artist uses modern means to convey traditional themes. Rachel Sylvester says that MPs of all colours should take heed.

10. Courage: a product of practice rather than faith (Guardian)

Giles Fraser discusses the question of moral courage and whether you can get better at it.

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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: products-and-investments/ pensions/pensions2015/