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


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On day three of ‘manifesto week’, the Liberal Democrats have announced the policy pledges they will uphold should they form part of the next government.

In his Manifesto announcement, Nick Clegg said: “We want Britain to be the best place in the world to save for, and enjoy, your retirement.”


But what does this mean in practice and what policies is the party committing to? We’ve trawled through the vast 159 page document to bring you all the relevant pensions news.

Tax relief

“We will establish a review to consider the case for, and practical implications of, introducing a single rate of tax relief for pensions, which would be designed to be simpler and fairer and which would be set more generously than the current 20% basic rate relief.”

The Liberal Democrats will be popular with the pensions industry as the only party who have actually committed to a review of tax relief. The Conservative, Labour and Green parties have all committed to a restriction in pensions tax relief for higher earners, a move that has been widely criticised as short-termist, populist and likely to discourage people from saving into pensions.

Many in the industry have been calling for an independent pensions commission, specifically to establish a long-term agenda for issues such as tax relief and to stop politicians tinkering round the edges in every budget, Autumn Statement and election race. 

Whether a flat-rate of tax is the perfect solution or not remains to be seen, but there will be widespread enthusiasm for a review that leads to a long-term position.


“We will improve workplace pensions and continue to auto-enrol workers, completing the rollout of this scheme in full and on time. We will crack down on charges and encourage people to save more into their pension pot through this scheme.”

Predictably the Lib Dems are keen to remind everyone of the huge success of auto-enrolment so far. Steve Webb has long been vocal on the importance of getting contribution rates higher, so it is unsuprising that encouraging people to save more appears on the manifesto.

What is more strange is that they are the only party so far to focus on the future of auto-enrolment.

Single-tier pension

“Continue the introduction of our simpler single tier pension so people can plan ahead securely, and feel the benefit of every pound they save. ”

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

“Legislate to make the ‘triple lock’ permanent, guaranteeing decent pensions rises each year”

The Liberal Democrats have rightly taken credit for the creation and preservation of the triple lock. Enshrining it permanently in law is a natural next step, though questions should be raised about the economic viability of such a move.

Pensions freedoms

”Press ahead with plans to allow people more freedom in the use of their pension pots and to allow existing pensioners to sell their annuity.”

The end to compulsory annuitisation is a reflection of what the coaltition has already done, rather than a Lib Dem promise for the future. it is interesting to note that the Lib Dems have committed to push ahead with the resale of annuities, something which does not appear in the Conservative manifesto.

Pensioner benefits

“We will withdraw eligibility for the Winter Fuel Payment and free TV Licence from pensioners who pay tax at the higher rate (40%). We will retain the free bus pass for all pensioners.”

Not unlike the Labour party, the Lib Dems are promising to restrict benefits for higher rate pensioners. It’s a relatively popular policy, but more detail is needed about how this would be enforced in practice. 


This a fairly progressive manifesto for the Liberal Democrats, especially when compared with the Conservative’s ‘more of the same’ position. This is hardly suprising though, Steve Webb has been at the heart of the pensions reforms, and these pledges clearly have his stamp on them.

Of most interest will be the review on tax relief, as it takes us one step closer to the long-term consensus desired by most in the pensions industry.  However, whether the Liberal Democrats pull back enough seats to be credible coalition partners, and whether pensions will be one of their ’red lines’, remains to be seen.