State pension one of key election battle grounds
Partner, Claire Carey comments on the pensions battle lines drawn in the election manifestos of the three major parties:
“With the Election manifestos of all three major parties now published, the state pension appears to be one of the key pensions battle grounds which should be reassuring news for pensioners.
Both Labour and the Liberal Democrats have pledged to maintain the triple lock (increasing the state pension each year by the higher of earnings, prices or 2.5%) for the next parliament. In contrast, the Conservatives are suggesting a switch to a new “Double Lock” from 2020, with the state pension rising in line with the highest of inflation or earnings. And with state pension age already set to rise to age 66 in 2020, Labour are looking to commission a new review with the aim of developing a “flexible retirement policy”, reflecting contributions paid, the wide variations in life expectancy and “the arduous conditions of some work”.
On the pensions tax relief front, in a move away from the current system of tax relief payable at an individual’s marginal rate, the Liberal Democrats are considering the possibility of introducing a “simpler and fairer” single rate of tax relief set at a more generous rate than the current basic rate of 20%.
Finally, ramping up the Pensions Regulator’s powers is high on the Conservative’s pensions agenda, whose current powers they view as “insufficient to ensure that pension savers, pensioners and prudent company directors are protected from unscrupulous business owners”. The Conservatives pledge to “tighten the rules against such abuse”, increasing “the punishment for those caught mismanaging pension schemes”.
In particular, the Pensions Regulator could be given new rights “to scrutinise, clear with conditions or in extreme cases stop mergers, takeovers or large financial commitments that threaten the solvency of the scheme”. In addition, the Pensions Regulator may also be armed with powers to issue punitive fines “for those found to have wilfully left a pension scheme under-resourced”. A new criminal offence aimed at company directors “who deliberately or recklessly put at risk the ability of a pension scheme to meet its obligations” could also be on the cards.”