At 7am on Thursday 8 June, polling stations across the UK will open. How prominently do pensions issues feature in an election overshadowed by Brexit and electoral realignment? This article focuses on the different policy promises being made on pensions by the UK’s main political parties.
Once more, rocky trestle tables and plywood booths will be set up in schools, church halls and community centres throughout the country. Millions will grasp stubby pencils attached by a length of string to make a mark and answer the question: 'who should govern us for the next five years'?
This is the fourth year in a row that people are being asked an important question about the future of the UK. With two referendums and two general elections since September 2014, it seems as though the psephological Groundhog Day is never ending.
How prominently do pensions issues feature in an election overshadowed by Brexit and electoral realignment?
The high profile cases of BHS and British Steel have put the issue of the security of DB pension schemes high up the political agenda. The 'triple lock' guarantee on state pension increases and state pension age ensure that pensions continue to receive plenty of coverage.
To reflect the rising importance of the smaller parties, we've ploughed through six manifestos to see what the parties are offering for employers, savers and pensioners. There are far fewer consistent themes than in 2015. The UK's parties offer materially different approaches to tackling the big issues.
We've outlined some of the key areas in this article and focused on what the parties promise to do. We've also set out comprehensive coverage of the policies affecting employment and pensions in our Employment and Pensions Manifesto Commitments table.
Protecting members' benefits
Both the Conservative Party and the Labour Party commit to implementing new policies to protect benefits in defined benefit pension schemes.
Labour promise to amend the takeover code: ' to ensure every takeover proposal has a clear plan in place to protect workers and pensioners'.
What isn't clear is how such plans would be policed or enforced. Would this result in greater involvement by The Pensions Regulator? Or merely a vaguely worded statement that is forgotten as soon as the deal is done?
The Conservative Party manifesto has far more detail on this subject. Under a Conservative government The Pensions Regulator will be given increased powers in relation to transactions so that it can:
- scrutinise, clear with conditions or, in extreme cases, stop mergers, takeovers or large financial commitments that threaten the solvency of the scheme;
- issue punitive fines for those found to have wilfully left a pension scheme under-resourced; and
- disqualify company directors who have wilfully left a pension scheme under-resourced.
In addition, the Conservative Party will consider introducing a new criminal offence for company directors who deliberately or recklessly put at risk the ability of a pension scheme to meet its obligations.
The Conservatives will hope that such plans will help to make defined benefit pension schemes 'strong and stable'.
Autoenrolment, LISAs and fees
There is less of a theme when the parties survey the rest of the occupational and personal pensions landscape. The Conservative Party focus on promoting saving, by supporting the expansion of automatic enrolment (i.e. by making it available to the self-employed) and doubling down on the roll out of Lifetime Individual Savings Accounts (Lifetime ISAs or LISAs).
The Labour Party, meanwhile, focus more on fees and charges, promising to: 'end rip-off hidden fees and charges'. There is no further detail provided. Given the focus on the capping and banning of various fees, payments and charges over the past few years, what is left to attack?
More radically, the Liberal Democrats seek to reopen the debate around the taxation of pension savings. They promise to establish a review to consider the case for the introduction of a single rate of tax relief for pensions. They also promise to: 'abolish remaining marriage inequalities in pensions'. No further detail is provided, but it is assumed this means conferring same-sex spouses and civil partners with full entitlement to spouses' benefits.
Locking in the gains - the state pension and state pension age
As in previous years, more space is reserved for policies relating to the state pension.
All of the parties except the Conservative Party have committed to retaining the 'triple-lock' on state pensions, so that state pensions continue to increase by the highest of inflation, average earnings, or 2.5%.
The Conservative Party have promised to retain the 'triple-lock' until 2020 and, thereafter, introduce a 'double-lock'. This will remove the guaranteed floor of 2.5% increases, linking state pension rises with the higher of inflations or wages growth.
A clearer difference of approach emerges on the state pension age. The Conservative Party continue the theme of fiscal responsibility by promising to ensure that state pension age reflects increases in life expectancy.
The Labour Party reject this, promising to stop the planned increases in state pension age beyond 2020. Under Labour, the state pension age will stay at age 66.
Both the Labour Party and UKIP make promises around flexible access to state pensions.
Public sector pensions
Only the Conservative Party and Labour focus on public sector pension schemes. The Conservatives promise to create UK sovereign wealth funds and to encourage pension funds to join them. Whilst not restricted to public sector pension funds, it seems likely that Local Government Pension Schemes funds will be the biggest target for seeking investment.
The Labour Party promises to give members of the LGPS full trustee status. This will, according to Labour, help to control investments, and reduce fees and charges.
You can see the full details of what each of the parties are promising on employment, and compare these commitments, in our comprehensive Employment and Pensions Manifesto Commitments table.