Despite Brexit being the focal point of many election manifestos, the major parties have all made promises regarding pensions.
Stuart Price, Partner and Actuary at Quantum Advisory, looks into what the parties are saying. Stuart said:
“The key promise that all major parties have included in their manifestos is that they will continue the triple-lock for existing pensioners which guarantees the annual state pension will rise by either the average earnings, the cost of living, or 2.5% – whichever is highest.
“Labour has made the most pledges, with the boldest promise being to compensate those women born in the 1950s who have to wait to collect their state pension following the state pension age increase. The move, which is expected to cost around £58bn, disregards last month’s High Court ruling that women affected by the age increase would not be compensated or receive an ‘interim pension’.
“Jeremy Corbyn’s party also says it will not increase the age at which you can collect your state pension beyond the current 66 and it would support rolling out collective defined contribution (CDC) schemes like the Royal Mail’s which is a sort of half-way house between defined benefit (DB) and defined contribution (DC) pension arrangements.
“On auto-enrolment, Labour would like to expand the successful scheme to include those on lower wages and the self-employed, and continue their drive to introduce the long-awaited pensions dashboard.
“Apart from guaranteeing the triple-lock, free bus passes and free TV licenses for pensioners, the Conservatives has also promised to revive Guy Opperman’s three-part pension bill. The bill, which was announced in October’s Queen’s Speech, supports CDC schemes and the pensions dashboard while also giving the Pensions Regulator new powers over DB schemes. The Conservatives would also make a review into the pension tax complications impacting senior NHS workers, a priority.
“The Liberal Democrats failed to mention if it plans to continue with its radical changes on pensions tax relief promised in both its 2017 manifesto and at the 2018 party conference. Previously, the party pledged a flat rate of 25% on pension contributions and cancelling employee National Insurance payments on those contributions. Has this idea now been scrapped?
“Like Labour, the Liberal Democrats and Plaid Cymru say they will support women born in the 1950s affected by the state pension age increase, while Plaid also plan to restrict pensions tax relief to 20 per cent.
“Unfortunately, in my opinion, none of these promises look to address the key issue that the younger generation in the UK will have far inferior pension arrangements once they reach retirement age to that of those currently in retirement or approaching retirement. As a nation, if we do not look to try and address this issue soon then in thirty to forty years’ time, we could have a crisis on our hands with many people unable to afford to retire or retiring in poverty.”
Stuart Price, is Partner and Actuary at Quantum Advisory, which has offices in Amersham, Birmingham, Bristol, Cardiff, and London. Quantum provides pension and employee benefits services to employers, scheme trustees and members.