Unveiling their manifesto today, the Conservatives have confirmed some of their intentions on pension policy if elected on 8th June.
Triple locked out
Theresa May's new government would only maintain the Triple Lock until 2020, thereby honouring the pledge made in the 2015 election manifesto. Thereafter the 2.5% element would be dropped.
Hargreaves Lansdown comment:
Tom McPhail, head of policy: "This is largely what we expected. The Triple Lock has largely done its job in improving pensioner incomes in recent years and protecting the retired population from the effects of the post 2008 recession. A double lock still provides a more robust level of security than is enjoyed by the majority of the working population.
They have also confirmed state pension ages will rise, though they have ducked until after the election the question of how far and how fast. Those aged in their early 40s and below should brace themselves for another year or two of work before getting their state pension; age 70 still looks on the cards for those in their 20s and 30s."
The Tories have made a commitment to long term saving and investing, including the Lifetime ISA.
Tom McPhail: "This country needs to save and invest more for the long term. Those who want to save for retirement should be encouraged and rewarded so it is welcome to see the government giving an express statement of intent. We'd like to see a review of pension tax policy by the next government as it could be made fairer, simpler and more efficient. The Lifetime ISA has already proved very popular with investors since its launch in April so it is not surprising the Tories have committed to retaining it.
The policy position on funding of social care throws into question the durability of the current very generous tax treatment of defined contribution pension funds on death. I wouldn't be surprised to see some kind of fiscal retrenchment if the Conservatives form the next government.
The commitment to bring the self-employed into auto-enrolment is welcome. It needs to be expanded to accommodate the lower paid as well, who are currently missing out on much needed retirement savings."
They have also promised stronger powers for the Pension Regulator to protect pension scheme members rights. The challenge here will be to strike a balance between protecting pension scheme members' rights on the one hand, and on the other allowing British industry to flourish.