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What the 2024 General Election means for your money – 5 things to watch

From the State Pension and lifetime allowance (LTA) to annuities, savings and ISAs, here are 5 things to keep an eye on in the upcoming General Election.
Rishi Sunak announces date of the UK general election - Gettyimages

Important information - This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

As politicians limber up for an election race, they’ll be hoping to kit themselves out with the policies that give them the best chance of a win.

With money so tight for so many millions of people, all eyes will be on the impact on our finances.

Here are five key things to watch.

This article isn’t personal advice. Pension, ISA, and tax rules can change, and benefits depend on your circumstances. If you’re not sure what’s right for you, seek advice.

1

The State Pension

The future of the State Pension – most notably the triple lock – is a major issue. There’s support for it from both Labour and the Conservatives, but it’s a divisive policy with younger generations shouldering the ever-burgeoning cost.

Our recent research* showed just 16% of the 18-34 age group would be more likely to vote for a party pledging to keep the triple lock. This compares to well over half of the over 55s.

Regardless of who wins this election, people need certainty as to what they’ll get from the State Pension.

The eventual victor needs to implement a review of the system, and the triple lock within it, so people can plan for their future.

*Data taken from a survey of 2,000 people undertaken by Opinium on behalf of HL in April 2024.

2

Lifetime allowance and pension taxes

The outcome of the General Election will hopefully bring some much-needed clarity on the lifetime allowance (LTA).

The Conservatives scrapped it, but Labour has said it wants it reinstated, and pension investors need certainty.

Any reform of the pension tax system should be done with the aim of incentivising people to save for their futures, without having to worry about being tripped up by complex rules.

3

Annuities

The annuity market has been riding high.

The expectation is that as interest rates start to fall, so will annuity incomes.

However, given that a General Election makes the prospect of a rate cut less likely this summer, we could see annuity rates stay higher for a bit longer.

4

Savings

The savings market moved quickly in response to the election announcement.

The Bank of England is going to want to avoid changing the base interest rate around the time of an election. That means the savings market has now priced in a delay to at least September.

Savers could benefit, because it might mean a pause in savings rate cuts, so easy-access savers could continue to earn rates at or above 5% for a while longer.

If you have cash you can tie up for a period, it also opens a potential window of opportunity, because fixed rates around 5% could hang around for longer too.

However, it’s still worth acting sooner rather than later. The last week or so has shown how quickly things can change, so it’s worth taking advantage while you can.

If you choose a fixed-rate product, you can’t usual get access to the money before maturity. Inflation reduces the future spending power of money.

5

ISAs

As taxes rise, ISAs are becoming even more important for investors.

Labour has spoken about the need for simplification in the past, while the Conservative government is currently consulting on the ‘British ISA’.

It will be interesting to see how this shakes out. We can only hope that any changes end up making the range even simpler and easier to use, rather than accidentally introducing needless complications.

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Article image credit: Carl Court/Getty Images

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Written by
Helen-Morrissey
Helen Morrissey
Head of Retirement Analysis

Helen raises awareness of key retirement issues to help people build their resilience as they move towards their later life.

Susannah Streeter
Susannah Streeter
Head of Money and Markets

Susannah is a key contributor to our content. She follows changes in monetary policy movements and fiscal policies closely to assess the impact on financial markets and economic growth, and has extensive experience in covering technology stocks and the retail sector.

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Article history
Published: 24th May 2024