What has the Conservative Party promised on pensions and what does it really mean? Sara Benwell explores

WPL15_plain_badge_GREY

To hear industry experts give their election verdicts, come to Workplace Pensions Live, our flagship annual event in May. It will be the first major gathering of the pensions community after the General Election. Join us to digest the ramifications for pensions.

On day two of what we at Pensions Insight  are dubbing ‘manifesto week’, the Conservatives released their offering detailing the promises they intend to uphold should they form the next government.

david_cameron

In his Manifesto announcement, David Cameron said: “Our commitment to you: If you have worked hard during your life, saved, paid your taxes and done the right thing, you deserve dignity and security when you retire.

“We want Britain to be the best country in which to grow old.”

But what does this mean in practice and what policies is the party committing to? We’ve trawled through the 82 page document to bring you all the relevant pensions news.

Tax relief

We will take the family home out of Inheritance Tax for all but the richest by raising the effective threshold for married couples and civil partners to £1 million”

Raising the inheritance tax threshold may be popular with many, but don’t let the wording fool you. Not unlike Labour’s plan to cut university fees, this will be paid for by scrapping pensions tax relief for higher earners.

The restrictions were a disappointment to many in the industry who expected the Conservatives to do more to encourage savers. However much of the sting was removed as the policy was pre-announced last week.

This will be paid for by scrapping pensions tax relief for higher earners”

It’s not just the Conservatives. The policy is almost universally supported by all the parties. The Green Party have pledged to cut it by half and the Liberal Democrats have been working on a flat rate of relief solution for a while now.

Single-tier pension

We will reward saving by introducing a new single-tier pension”

This is a slightly strange one, in that the Conservatives have made it sound like it’s a new manifesto pledge, but actually this was introduced by the coalition government and will come into force from 6 April 2016.

The triple-lock

We will continue to increase the State Pension through our triple lock, so it rises by at least 2.5 per cent, inflation or earnings, whichever is highest.”

Like both the Labour party and the Lib Dems, the Conservive party has pledged to preserve the Triple Lock. Interestingly they are referring to it as “our triple-lock” when most in the industry credit it as a brain child of the Lib Dems.

Pensions freedoms

“We will give you the freedom to invest and spend your pension however you like – and let you pass it on to your loved ones tax-free.”

The end to compulsory annuitisation is another pledge that is more reflective of what the Conservatives have already done, rather than what they intend to do. However, it does make sense that they are reiterating it here. In particular, the ability to pass on pensions tax-free after death is a popular policy that has been relatively unpublicised.

Pensioner benefits

“We will protect pensioner benefits including the free bus pass, TV licences and Winter Fuel Payment”

Plus ça change, plus c’est la même chose. Nothing really new here from the Conservatives, although top rate pensioners will be pleased to keep their winter fuel allowance which would be axed under a Labour government.

Verdict

This was a wholly unsurprising manifesto from a pensions perspective, with no new giveaways or unexpected cuts. Indeed, most of the pledges are policies that are either already in place or expected to be implemented by the next government.

Whether a quiet manifesto would equate to a quiet government for pensions remains to be seen”

Indeed, the only cloud on the horizon is the introduction of restrictions to pensions tax relief, a policy which is almost universally unpopular in the pensions industry.

Tax relief aside, such an unsurprising manifesto will be a relief for many. The industry has just come through the biggest pensions revolution in living memory and trustees, pensions lawyers, scheme managers and consultants want space and time to get to grips with the new changes.

Whether a quiet manifesto would equate to a quiet government for pensions remains to be seen.