In part three of our general election special, we explore what Ukip might have in store for the pensions industry
Ukip seemingly do not yet have a pensions policy, which is surprising, given 41% of people intending to vote for the party are over-55, according to the most recent Ipsos Mori Political Monitor.
Revealingly, their Manifesto 2014 makes no mention of pensions whatsoever.
What to expect
Back in August 2014, Prospect Magazine, asked Tim Aker, the head of the Ukip’s policy unit, about whether the party had looked at public sector pensions, to which he replied “I have, and then got very scared and ran away.”
Raheem Kassam, Nigel Farage’s senior adviser told Pensions Insight, “Ukip’s pensions policy, as well as where the party stands on a raft of issues affecting investors, will be disclosed in full in our General Election manifesto next year.“
In the absence of any current political thought on pensions from Ukip, the only indication we have of their pension policy, comes from a 2010 pensions policy document authored by Godfrey Bloom, David Lamb and Mark Wadsworth. Both Bloom and Wadsworth have since left the party, and David Lamb died in April 2011.
1. State pensions
In the 2010 document, Ukip stated that it would roll all existing State pensions, Pensions Credit and the Winter Fuel Allowance into a flat-rate non-means tested, non-contributory and non-taxable “Citizen’s Pension” of £130 per week for all pensioners aged 65 and over, in order to “end discriminatory and over complex means testing on pensions”.
LeGrand commented that it is unclear how much this would cost the treasury but that it is “pretty damn generous”.
2. Pensions tax relief
The party also said it would reduce the annual limit for tax-relievable pension contributions to £10,000 gross from £235,000 and reinstate the dividend tax credit at 20%.
This refers to tax credits on share dividends, which were fully removed in 1997 by Gordon Brown.
3. Pensions freedoms
In line with current thinking, the document suggests Ukip would “allow more flexibility in the use of the final value of a pension fund”, which suggests the party would continue to implement the new freedoms.
The document tells us the party would axe the National Pensions Savings Scheme as it is “costly and counter-productive”. It would also encourage industry wide funds to reduce administration costs.
5. DB pensions
LeGrand points out that “This extraordinary document also apparently suggests scrapping the Pension Protection Fund”, again because it is viewed by the party as costly and counter productive.
Further to this the policy outline states that the party will “bring the generosity of unfunded public sector final salary pensions back into line with typical pension provision in the private sector to avoid potential liabilities of £1,000 billion”, although there is no indication of how this would be done.
6. The EU
In line with the party’s core raison d’être, it promises to “leave the EU to avoid massive liabilities in supporting unfunded EU pensions that would wreck the UK economy.”
It’s hard to make full-scale predictions based on a document authored five years ago, by three people who are no longer involved with the party.
What is clear is that if Nigel Farage wants to keep his populist voter base on board, he will need to come up with a credble pensions policy, ahead of the televised debates later this year.
If he is to learn anything from the SNP’s battle for Scottish Independence (which has to be a priority given the party’s central policy of a Brexit from Europe) it must surely be that a lack of realistic and thought out economic policy can cause irreparable damage.
Certainly we can expect the Lib Dems, Labour and Conservative parties to tackle Farage heavily on economic policies in the debates, and if Farage has nothing to say on pensions, the grey vote (central to Ukip’s voter base) will surely be disappointed.