But Steve Webb, former pensions minister and director of policy at Royal London, takes a more neutral stance.
“Higher interest rates seem likely under a Labour government, which is good news if you are buying an annuity, but less good news if you are running a company pension scheme if your deficit increases as a result.”
But he says the biggest impact of a Labour government will be through its wider economic policies rather than through any individual measure.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, expects a Labour government to reduce various rates of tax relief.
Mr McPhail says we could see the following changes to pensions:
- A reduction in the annual allowance;
- A freezing of the state pension at 66;
- A cut in the lifetime allowance.
He adds: “We may see a curtailment of George Osborne’s pension freedoms, with a move back towards annuitisation.”
Crackdown on tax
Most experts warned that one of the most radical changes that could result from a Labour government is an overhaul of inheritance tax.
A report called Land for the Many published by Labour in June 2019 suggested that IHT should be abolished and replaced with a lifetime gifts tax levied on the recipient.
Under this system, tax would be levied on the gifts received above a lifetime allowance of £125,000.
The report suggested when this lifetime limit is reached, any income from gifts would be taxed annually at the same rate as income derived from labour under the income tax schedule.
The report said: “The Resolution Foundation estimate that taxing gifts through the income tax system would raise £15 billion in 2020-21, £9.2 billion more than the current IHT system, and would do so more progressively.
Mr McPhail says clients should maximise all the tax reliefs now where possible as Isas, pensions, capital gains tax, IHT: all are potentially caught by a Labour-led redesign of the economy and fiscal system”.
Mr Bull says: “The possible replacement of [IHT] with an income tax liability on the recipient’s gifts is causing a major headache for parents who had been thinking of making gifts to their children at a later date, perhaps to help them get on the housing ladder.”
He adds: “I know of families who are accelerating gifts to their children to ensure that they fall within the current tax regime. That’s fairly straightforward if the children are currently aged 18 or more. It’s not so straightforward when children are younger.”
A potential Labour government could mark the demise of the buy-to-let market and reduce profitability for the UK’s 2.6m landlords, industry figures warn.
Bruno Welch, managing director and mortgage consultant at Clayton-Welch Associates, says: “If a Labour government were to get into power the impact on the buy-to-let market, based on their planned proposals of a right-to-buy scheme, could be catastrophic.”