The main political parties are expected to take a lighter touch on pensions going forward with manifestos likely to be sparse of radical reform, Royal London's Steve Webb has said.
A policy paper from Royal London on what to look out for in the party manifestos on pensions, published yesterday (November 10), suggested there will be a different tone to this year’s manifestos compared with those from the 2017 election.
In 2017 the Conservatives wrote their manifesto in anticipation of securing a large majority in the election, therefore it included some challenging policies in areas relevant to older voters such as state pension increases and social care funding.
But Royal London pointed out this year the situation was less clear so party manifestos “will resemble something of a ‘bidding war’, with little sign of the rhetoric around ‘tough choices’ which has characterised previous campaigns”.
For instance, Royal London said given the risk that for instance tax relief reform could create significant numbers of losers (as well as gainers), it would be surprising if either of the larger parties proposed major changes in this area.
Previous Conservative chancellor George Osborne had mulled bringing changes to the way pension tax is calculated but dropped plans in the run up to the Brexit referendum.
There hasn't been much noise around the issue since, with the exception of the NHS pension scheme, which prompted a consultation to be launched earlier this year after it emerged doctors were cutting their hours to avoid punitive tax charges.
In its report Royal London said: “The main element of the tax relief system where announcements are possible would be changes to tackle the issue around NHS doctors and consultants (and others in a similar position) caused by the ‘tapered’ annual allowance.
“The issue has been raised in parliament by MPs and peers from all parties, and it is the one area of the system where manifesto announcements seem possible.”
It added: “Whilst it is easy to come up with reforms that generate more gainers than losers (such as flat rate tax relief), reform can still generate large losses for some groups.
“In a ‘safety first’ manifesto, the instinct of the larger parties will be to steer away from these issues. It will however be interesting to see if the very radical and somewhat controversial proposals by the Liberal Democrats for changes to pension tax relief will make it from the conference floor to the party manifesto.”
However, there are areas of cross-party agreement in pension policy which could lead to some overlap between the manifestos, according to Royal London.
These include support of automatic enrolment, the development of the pensions dashboard and for new models of ‘collective’ workplace pension provision - all areas included in the Pension Schemes Bill which had started to make its way through parliament before it was dissolved.
But parties are generally split on policies around the state pension.