Steve Webb, who served in the role during the Coalition until last year’s General Election, said he was shocked about a change in the Ministerial set up announced yesterday.
Ros Altmann quit as his successor at the weekend, citing short-term political considerations as taking precedent over long-term policy making.
She has not been directly replaced, with Richard Harrington becoming Parliamentary under secretary for pensions, in a less senior role.
Mr Webb, who now works as director of policy at Royal London, said: “This new decision is a demotion for pensions and sends a worrying signal to all who are concerned about the long-term financial health of the nation”.
He said: “The decision by the DWP to make the role of pensions minister a junior ministerial post is a shock.
“These issues should be a central concern for the department going forward. The seniority of ministers really does matter, not least in dealings with other government departments such as the Treasury.”
He highlighted the on-going importance of the DWP’s role in overseeing the automatic enrolment of ten million workers into workplace pensions, for policy on the multi-billion pound deficits in company pension funds and making sure the new ‘freedoms’ work effectively.
He paid tribute to Baroness Altmann, saying: “Ros Altmann deserves considerable credit for standing up for workplace pensions and challenging the Treasury over its desire to scrap pension tax relief and move to a pensions ISA.
“The DWP has lost a powerful voice in fighting the corner of workplace pensions with the resignation of Ros Altmann.
“The new minister takes over at a time when there is much to be done in the world of pensions. Millions of workers are yet to be automatically enrolled and millions more are not saving enough for their retirement.”
He called for coherent policy between Treasury and DWP and an end to tax relief being “seen as an annual 'piggy bank' to be raided by cash-strapped Chancellors”.
He added: “Let us hope that the new ministerial team will have a long tenure and that we will not see a return to the revolving ministerial door that we have seen in the past.”
The DWP has been contacted for a response.
The full list of changes to Ministers at the Treasury and DWP is:
Department for Work and Pensions
• Secretary of State for Work and Pensions – Rt Hon Damian Green MP
• Minister of State – Penny Mordaunt MP
• Minister of State – Damian Hinds MP
• Minister of State – Lord Freud
• Parliamentary Under Secretary of State – Caroline Nokes MP
Parliamentary Under Secretary of State – Richard Harrington MP
HM Treasury
• Chancellor of the Exchequer – Rt Hon Philip Hammond MP
• Chief Secretary to the Treasury – Rt Hon David Gauke MP
• Financial Secretary – Jane Ellison MP
• Economic Secretary – Simon Kirby MP
Commercial Secretary – Lord O’Neill of Gatley