Pension Promises

The UK's political parties have launched their manifestos and the electorate is set to hit the polls on December 12.

With only a matter of weeks until the ‘big day’ we delve deeper into the Conservative, Labour and Lib Dem manifestos and reveal where the parties stand on pensions.

But first, let’s look at what each party had to pay on pension policy back in 2017.

In their 2017 manifesto, the Conservative Party pledged to:

• continue to support the successful expansion of auto-enrolled pensions. Continue to extend auto-enrolment to small employers and make it available to the self-employed;
• maintain the Triple Lock until 2020. After 2020, introduce a new Double Lock, meaning that pensions will rise in line with the earnings that pay for them, or in line with inflation - whichever is higher; and
• ensure that the state pension age reflects increases in life expectancy, while protecting each generation fairly.

In 2017, the Labour Party's manifesto pledged to:

• end "rip-off hidden fees and charges";
• guarantee the state pension 'triple lock' for the lifetime of the next parliament;
• provide redress for women born in the 1950s who have been adversely affected by changes to the state pension age;
• commission a new review of the state pension age.

The Liberal Democrats 2017 manifesto made commitments to:

• aim in the long-term, and as resources allow, to raise the employee National Insurance threshold to the Income Tax threshold, while protecting low earners' ability to accrue pension and benefit entitlements;
• maintain the 'triple lock' of increasing the State Pension each year by the highest of earnings growth, prices growth or 2.5% for the next parliament; and
• 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.

Looking to the future

Fast forward to 2019 and here is what the parties have to say on the following big issues:

Tax relief

 Pension contributions attract tax relief, but not for some of those in AE who earn less than the ￡12,500 income tax threshold. Although some get tax relief, others whose PAYE uses the ‘net pay arrangement’ do not.  

• Tory Manifesto pledges to conduct a "comprehensive review" into an anomaly which has seen more than 1 million workers earning between ￡10,000 and ￡12,500 - miss out on pension tax relief.
• There is nothing in the Labour Manifesto about pensions tax relief and a lack of proposals in the Lib Dem’s manifesto to overhaul the pensions tax relief system, despite it featuring in the party's 2017 manifesto.

Our view:

This is an issue that must be addressed by the next government to ensure the 1.75million workers affected by this - the majority women - receive much-needed tax relief. Read more on what we think is needed here > https://thepeoplespension.co.uk/manifesto 

Childcare:

All major parties discussed an expansion of free childcare.

• Labour plans to offer 30 hours’ free childcare during term-time for all 2- to 4-year-olds as well as “additional subsidised hours” of childcare for 2-, 3- and 4-year-olds, with parents’ payments depending on income. The party’s proposals represent one of the biggest giveaways in the history of England’s free childcare programme, providing universal, funded, full-time childcare to all 2- to 4-year-olds.
• Lib Dems are offering more hours, covering more weeks of the year, to more children, funded at a higher rate than currently. They would also target younger children (9 months to 2 years) in working families. The Liberal Democrats promises on childcare spending are some of the most striking spending plans in their manifesto. They would dramatically expand the scope of the welfare state at younger ages. On their own costing they would increase spending on universal free childcare almost by a factor of five.
• The Conservative manifesto does not include any plans to offer a further extension of free, pre-school childcare. Instead, it promises ￡210 million a year for “at least” three years (plus another ￡210 million in capital funding in 2021) to encourage schools in England to develop or expand ‘wrap-around’ childcare (before and after the school day) and childcare outside of term time. This offer could benefit parents of school-age children by increasing their childcare options.

Our view:

According to our research, almost four in 10 women who returned to work on reduced hours after having a child would have increased their hours if childcare was more affordable.

We’re calling on the next government to future proof the guaranteed 30 hours per week childcare for all three and four year olds policy, by funding it via a specific ear-marked grant to local authorities.

Dashboards

According to the DWP a pensions dashboard is intended to be "a digital interface that will enable people to see all their lifetime pension savings in one place.”

• Conservative manifesto commits to reintroducing legislation that protects pension pots from being plundered by reckless bosses, helps savers be better informed with pension dashboards, and creates a new style of pension scheme which is more sustainable for workers and employers.
• Meanwhile Labour committed to creating "a single, comprehensive and publicly run pensions dashboard that is fully transparent, including information about costs and charges". 
• There were no comments on dashboards in the Lib Dem manifesto.

Our view:

Whichever party is next in government, we’re calling on them to ensure the pensions dashboard is a single point of truth - transparent and free from commercial sales pitches. Our view is that a pensions dashboard that answers the question people want answered – ‘What have I got and where is it?’ – would be a big step forward in public policy.

Pensions for the self-employed/ low income workers

Auto-enrolment has been a success so far, dramatically increasing the number of private sector pensions savers – 10m more people are now saving for retirement. The next step is to ensure people are saving enough for a decent retirement and that people aren’t unnecessarily excluded from auto-enrolment. Lower paid workers and women - often one and the same - are the least likely to be saving enough under auto-enrolment.

• In their manifesto, the Liberal Democrats pledged to "review the rules concerning pensions so that those in the gig economy don't lose out" but fail to say if this will include extending auto-enrolment.
• Labour, meanwhile, said it would expand access to automatic-enrolment for the self-employed and low-income workers. It also said it would "stop people being auto-enrolled into rip-off schemes".
• The Conservative manifesto did not cover this issue.

Our view:

The People’s Pension calls on the next government to:

1. End the ‘net-pay anomaly’ which deprives an estimated 1.75m low earners of much-needed tax relief through auto-enrolment.
2. Make auto-enrolment pension contributions begin from the first pound of earnings and lower the eligible age for auto-enrolment to 18.
3.  Introduce a universal flat rate of tax relief of between 25-30 per cent to increase the pensions savings of those who need it most and,
4. Build a national Financial Resilience Index focused on low income households.