Proposals to remove the triple lock on the state pension, cuts to the winter fuel allowance and unpopular proposals labelled a “dementia tax” all seemed to mark a break with previous attempts to win over the pensioner vote.
As the old adage goes, the first rules of politics is ‘learn to count’ – and with the Government now looking heavily dependent on a confidence and supply arrangement with the DUP, progress on the longer-term challenges facing policy-makers looks increasingly difficult.
That said, the magnitude of these issues could mean they could actually benefit from cross-party consensus if tribal tendencies can be put to one side.
Social care
Arguably the policy issue that turned the election for the Conservatives. The question of how best to fund social care continues to divide and perplex, despite successive attempts by Governments of all hues.
Politicians and policymakers cannot simply pander to the silver vote, making real, sustainable reform all the more important, however challenging. Rob YuilleInsurers have been clear throughout that any funding solution needs to be simple and comprehensible, otherwise individuals simply won’t plan ahead.
Looking outside the box and away from the heat of a campaign, it is also time that policymakers addressed the social care elephant in the room that is housing.
Pensions tax relief
With radical reform looking less likely, the pensions sector has an opportunity to improve the way it currently explains the benefits of both tax relief and saving into a pension to consumers.
More widely, it may be time for debate on the purpose of tax relief, and whether the government view tax relief purely as a mechanism to incentivise saving for retirement or alternatively, whether it should also be viewed as an economic lever to ensure savers achieve a sufficient level of savings, so as to not become overly reliant on the state in later life.
Future of DB pensions
Prior to the election, the Government consulted on potential reforms to the defined benefit pension system. With a recent PWC report concluding that FTSE 350 companies' ability to meet the obligations of their DB pension schemes is at its weakest since 2009, proposals for reform look set to remain firmly in the laps of the DWP.
Specialist insurers have a role to play in helping schemes of all sizes de-risk –and could be more affordable through changes to Solvency II regulations at both UK and European level. Brexit offers a potential opportunity to refine the current regime.
Conclusion
There is no getting away from the fact that Brexit is the Government’s top priority over the coming years. But left neglected, the long term consequences of each of the above has the ability to severely undermine the outcomes of consumers in retirement.
With a resurgent “yoof” vote, politicians and policymakers cannot simply pander to the silver vote, making real, sustainable reform all the more important, albeit challenging.
Rob Yuille is assistant director, head of retirement policy, at the Association of British Insurers
Join us:
To continue the discussion please join us on 4 July at the Annual ABI Long-Term Savings Conference 2017, “Engaging Customers for Tomorrow’s Retirement”, for which FTAdviser is media partner.
An expert panel will explore the long-term sustainability of the State Pension, DB reform and social care funding in the context of the new Parliament.
