The forthcoming UK general election and the prospect of a new political party in power makes for an interesting 2024.
With intense speculation over the likely election date, all parties should now be well advanced with drafting – and costing – their manifesto commitments.
Aegon has been calling for these to include clear statements of policy on state pensions and social care funding as well as private pensions.
But alongside these headline grabbers, what of the long list of major pensions initiatives at various stages of development?
If Labour forms the next government, how many of these will survive? Indeed, are all assured of proceeding even if the Conservatives hold onto power?
In recent months, Labour has started drip-feeding its policy intentions around pensions and financial services.
So what will make the manifestos and how can we prepare for what could be ahead?
The state pension and other headline grabbers
In terms of commitments, top of the pensions list must be the state pension triple lock.
Despite what’s been said so far, will political parties guarantee in black and white it will remain for the next five years?
And how cast-iron might that guarantee be?
Personally, I’d favour retaining the overall policy but would review the precise calculations, smoothing out the inflation and earnings metrics over, say, three years to avoid unpredictable and potentially unfair peaks and troughs.
Of course, state pensions come at a multi-billion-pound cost, with no magic money pot to fund them.
One way of controlling costs is to increase state pension age, with recent speculative figures suggesting today’s 20-year-olds might have to wait till their mid-70s to be able to access it.
Scary stuff, and the higher it goes, the more people simply won’t be able to remain in work until it kicks in.
To me, this further strengthens the argument in favour of allowing people some flexibility to take their state pension a little earlier, with a reduction to make it financially fair.
Yes, there are complexities here, but surely industry and government can work together to come up with a workable solution.
Auto-enrolment: a boost for millions of employees
Auto-enrolment is seen across the political spectrum as a huge success, with over 11mn more employees saving in a workplace pension, albeit for most not enough.
It’s incredible – and not in a good way – that we’re still talking about implementing the 2017 reforms with no agreed timetable.
Surely this is one for manifestos – the question is, when will the annual salary offset of £6,240 begin to be removed and the minimum eligible age fall from 22 to 18?
And what do the political parties have to say about further enhancements, such as increasing the 8 per cent contribution rate and finding a pension solution for the self-employed?
This may be tricky right now as the cost of living crisis continues to be felt far and wide, but politicians shouldn’t sweep this under the carpet.
