In part two of our general election special, we answer the question ‘with just three short months untill the dissolution of parliament, what can we expect from the Labour party?’
For many in the pensions industry, Gregg McClymont has been a stable Shadow Pensions Minister since he took up the role in October 2011.
For example, Simon Kew, director of pensions at Jackal Advisory, argues that McClymont has been “fairly consistent in his messages, battling against high/unnecessary charges and pushing for greater governance standards.”
It should be easy then, to predict what the Labour party might come up with in their election manifesto.
What to expect
Unfortunately, no manifesto commitments have been released yet, and when Pensions Insight contacted the Labour party, all a spokesperson was able to confirm is that the priorities would be to focus on lifting restrictions on NEST, fine-tuning independent governance committees, and building on the 0.75% charge cap.
Luckily, more clues can be gleaned from the Conservative party’s ‘cost analysis of Labour party policy’ document, released in January this year, which outlines commitments made by Labour frontbenchers after the 3rd June 2013.
Ignoring the political posturing on the cost of policies, this document does give a comprehensive overview of policies announced.
- Lowering the employment threshold
- Capping pension tax relief for earners over £150,000.
- Restoring councillor pensions
- Single tier pension for women born 1951-53.
1. The triple lock
Thus far, the Labour party said it supports the triple lock “in principle”, but has made no firm commitments to it.
2. Pension freedoms
Kevin Wesbroom, senior partner at Aon Hewitt, points out that “Gregg McClymont has already questioned whether freedoms just offer the opportunities to make more, and worse pensions decisions”.
It is likely, therefore, that we’ll see some movement from the Labour government, if not to curtail freedom altogether, then at the very least to try and put protection around the changes.
Charles Cowling, director, JLT Employee Benefits, thinks Labour “may rein in some of the new DC freedoms, including a possible review of DB to DC transfers.”
Another area of focus may be pension charges. . Kevin LeGrand, head of pensions policy at Buck Consultant, is expecting “new rules to protect people from high charges on new pension products.
We can expect Labour to lower the auto-enrolment threshold, though they have not yet announced by how much. LeGrand expects the party to go one step further, “looking at new ways to give the nearly five million self-employed, what they call ‘fair access’ to savings.”
4. Pensions taxation
He also thinks that while none of the parties are likely to increase tax allowances for pensions, under Labour “a freezing of allowances and possibly further reductions are more likely”.
5. Labour laws
Cowling predicts Labour could introduce “new labour laws protecting the elderly who want to work beyond SPA, e.g. more flexible and part-time working.”
6. A single regulator
Kew believes the Labour party could also back a single regulator. “Not forgetting the Labour thoughts on a single regulator for pensions, that were voiced a couple of years ago… I feel that Labour would push forward with, at least, looking into the possibility in greater detail.”
It’s interesting that the Labour party is most likely to push for a single pensions regulator, something the industry has long been hankering for. Other than that, we’re likely to see renewed focus on traditional Labour policies such as lowering auto-enrolment thresholds and new labour laws to protect the most vulnerable in society. Whether they will stand on core issues like pensions freedoms and the ‘triple lock’ remains to be seen.