Pensions to be the polling station winner

Leaving aside the Brexit/Remain policy of each political party, each of the contenders for the December 13 election have realised the voting power lies not with the youth but the rising cohort of those aged 55 and over.

For this reason, pensions has been high on the agenda and one of the key talking-points over the past couple of weeks, along with pledges on taxation that purport to put more spending power in the pockets of ordinary Britons.

Here is a short summary of the various pensions and taxation pledges laid out by the various parties.

Pensions

As reported in Financial Adviser, the Green Party was the first to unveil a series of measures targeting pensioners. In particular, the party pledged to support the Women Against State Pensions Inequality campaign, which aims to recompense those 1950s women who were affected by the rise in the state pension age. 

Following suit, the Liberal Democrats promised to ensure Waspi women were “properly compensated for the failure of government to properly notify them of changes to the state pension age”.

The Labour party said it would also consider the Waspi campaigners, and compensate women affected by a state pension age hike with a £58bn commitment.

As reported by Financial Adviser, John McDonnell, shadow chancellor, said the pay-outs were a “historic debt of honour” to the women born in the 1950s, and the party put forward the idea of keeping the SPA fixed at 66 years old.

On Sunday 24 November, the Conservatives issued their manifesto. Given under a previous Tory government, Waspi women were informed by former pensions minister Guy Opperman their campaign will get nowhere, it was unsurprising that the manifesto did not repeat the headline-grabbing promises to rectify the pensions gap caused by the rise in women's SPA.

According to Baroness Ros Altmann, former pensions minister, the lack of commitment from the Conservatives to help Waspi women is "disappointing". While she does not think the Labour proposals are affordable - it would be a "staggering cost of £58bn" worth of taxpayers' money - she said she was "distressed that the Conservatives did not appreciate the problems that increasing women's SPA created".

Ms Altmann has suggested creating a flexible band of statutory pension ages, recognising health and years contributed to National Insurance, which could allow earlier access for some people, rather than continually raising the minimum age for everyone, regardless of their circumstances. 

But, as FTAdviser reported, the Conservatives did propose to fix a tax relief anomaly whereby, at the moment, people on the lowest salaries - the majority of whom are women, can end up missing out on £8,000 in pension savings during their working life. 

I am distressed that the Conservatives did not appreciate the problems that increasing women's SPA created - Baroness Ros Altmann

As Amy Austin wrote on FTAdviser: "The net pay/relief at source issue means that workers earning less than £12,500 may miss out on pension tax relief if their scheme or provider uses the ‘net pay arrangement’ method of delivering tax relief rather than the ‘relief at source’ method."

This is because the NPA does not pay tax relief to members who are below the income tax threshold, whereas relief at source does.

And, since former chancellor Philip Hammond raised the income tax personal allowance to £12,500, which is above the auto-enrolment minimum threshold of £10,000, this anomaly has become more problematic.

Baroness Ros Altmann, former pensions minister, commented: "This is not just an ‘anomaly’, it is a significant injustice. More than a million workers (mostly women), who earn less than £12,500 a year with any employer, are currently being charged an extra 25 per cent for their auto-enrolment pension.

"These workers do not realise they are paying so much more than they really need to and could have more take-home pay if their employer used an alternative pension scheme."

Also, the Conservatives said they would fix the tapered annual allowance which is affecting doctors’ pensions, but have stopped short of promising to scrap the taper altogether.

Taxation

As usual, the power of the pound in our pockets was also headline-grabbing news. The Liberal Democrat party said it would scrap the capital gains tax allowance to make the tax system “fair to all”.

The Green Party proposed to merge national insurance, capital gains tax, inheritance tax, dividend tax and income tax into one ‘consolidated income tax’ where all income is treated the same for tax purposes.

This may cost £22bn to implement but would bring an extra £20bn a year into the public purse by closing tax avoidance loopholes.

The Conservatives seemed to be "fairly static on changes to tax", according to Nimesh Shah, partner at Blick Rothenberg. With an £868 increase to the National Insurance primary threshold, taking this to £9,500, the Tory party has promised an annual £104 tax cut across the board for workers.

Moreover, there have been pledges to keep income tax, National Insurance and VAT under their Triple Tax Lock.

However, Mr Shah was disappointed that Boris Johnson’s leadership pledge to increase the basic rate income tax band to £80,000 was absent from the manifesto. Mr Shah explained: "This measure would have given a tax cut of up to £6,000 but was estimated to cost the Treasury around £8bn. 

"The proposal appears to have been dropped completely, and it’s difficult to now see if this measure will be introduced."

Long-term care

Along with personal wealth and pension arrangements, the need for funding long-term care is an increasingly important issue. Advisers have been warning of the need for people to make suitable arrangements themselves, as the welfare state can no longer properly support the burden of an ageing population living for longer in ill health.

Therefore it was unsurprising that many manifestos made promises about social care, although some promises seemed to be lacking in substance.

Labour suggested having a consultation on an overall care cap, limiting the amount that people have to pay over their lifetimes. Once the cap is reached, the state would cover the remaining costs. But while they pledged free personal care for the over-65s, this did not cover the cost of accommodation.

The Lib Dems claimed introducing a cap on the cost of care would be a “key starting point” for the party, as well as funnelling more funds into social care services to “relieve the crisis”.

The Conservatives have set aside £1bn additional funding a year for more social care staff and better infrastructure, there is still no long-term solution to the growing care crisis in the UK.

Yet according to Paul Johnson, director of the Institute for Fiscal Affairs, the lack of a plan to fix long-term care needs was "notable". 

In a statement, Mr Paul Johnson, said: “In his first speech as prime minister Boris Johnson promised to ‘fix the crisis in social care once and for all’. After two decades of dither by both parties in government it seems we are no further forward.”

simoney.kyriakou@ft.com

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