In part one of our general election investigation, we explore what we can expect to see in the Conservative manifesto later this year
The grey vote remains as electorally critical as ever, so it seems likely pensions will feature heavily in the Conservative manifesto as the party tries to woo the over-65
The only commitment we can be sure of so far is the protection of the triple lock, a guarantee to increase the state pension every year by the higher of inflation, average earnings or a minimum of 2.5%.
A Conservative party spokesperson told Pensions Insight the party is “committed to ensuring that everyone reaching retirement has dignity and security. “
They continued, “our pensions reforms give older people more freedom and greater financial security for their retirement.”
What to expect
The only commitment we can be sure of so far is the protection of the triple lock”
Coming out of a coalition government it is often tricky to establish where individual parties stand on specific issues.
Kevin LeGrand, head of pensions policy at Buck Consultants, points out that even though we could conceivably see the Conservatives being the dominant party “the fact that their policies are difficult to tell at the moment makes it an interesting thought process”.
All the pensions reforms in this parliament have been signed off by the treasury”
As the current pensions minister, Steve Webb has been the face of much of the pension reform. There is a risk the electorate may assume many of the changes have been Liberal Democrat policies at heart.This risk is particularly pronounced in the absence of a Conservative Pensions Minister to give a face to Conservative rhetoric.
Mark Hoban, the Conservative MP for Fareham and former Minister for Employment disagrees:
“By virtue of being the minister for pensions Steve has been fronting a lot of this, but this was a coalition commitment, and all the pensions reforms in this parliament have been signed off by the treasury. So whilst Steve has done a lot of thinking, things like single-tier were a product of quite a lot of work between DWP and the Treasury.”
1. The triple lock
Almost three quarters of over-65s voted in the last general election, so it is hardly surprising that the Conservatives put the triple lock front and centre of their campaign strategy for 2015. In January this year, David Cameron described it as the “first plank” of the Conservative manifesto.
2. Pension freedoms
Simon Kew, director of pensions at Jackal Advisory thinks we can expect more of the same, “They have nailed their colours to the mast quite clearly with a pro-UK Plc, tax raising (spend your pension) approach to buying the ‘grey vote’. I can’t see that there’s much else for them to do in that space, unless it is early access to pensions or some kind of tax break for accessing the money or saving more.”
3. Pensions taxation
Hoban MP predicts that tax relief on pension contributions will be a big feature of any upcoming parliament. “I think those parties that seem more inclined to close the deficit by raising taxes would potentially look to pensions tax relief.”
Kevin Wesbroom, senior partner at Aon Hewitt, asks whether we might see unified tax relief on pensions contributions. “Even the Conservatives are rumoured to be thinking that the current system stacks the dice too heavily in favour of the rich.”
4. Inheritance tax
Charles Cowling, director, JLT Employee Benefits, predicts further changes to inheritance tax. “The Conservatives have also been (and are likely to continue to be) more inclined to seek [further] reductions in inheritance tax.”
5. DB pensions
Cowling also predicts that the Conservatives are the party most likely to try to reduce DB pension provision in the public sector. “Their previous election manifesto contained the commitment to work with “trade unions, businesses and others to address the growing disparity between public sector pensions and private sector pensions, while protecting accrued rights”. A similar commitment in 2015 might be a springboard for more cuts in public sector pensions.”
All in all, we are expecting more of the same from the Conservative party, though it will be interesting to see how they square the protection of the triple lock, with promises for welfare cuts across the board. We will also wait with interest to see who will become the face of Conservative pension policy when parliament dissolves and the coalition is no more.