A future Labour government under Keir Starmer would be likely to extend auto enrolment and reverse chancellor Jeremy Hunt’s scrapping of the lifetime allowance, experts have predicted.
Inheritance tax, economic growth, the triple lock and tax relief for pension savers were discussed by a panel of Labour policy-making experts at the Pensions and Lifetime Savings Association (PLSA) annual conference in Manchester.
All delegates believed Labour would look at introducing measures to try and encourage equality through a review of taxation.
Lifetime allowance
Nicola Smith, head of economics and employment rights at the Tuc, said a Labour government would need to address the way wealth is taxed versus the way income is taxed.
Andrew Harrop, general secretary of the Fabian Society, said that while the shadow chancellor Rachel Reeves had committed to reinstating the lifetime allowance, what was needed was “a fair pension tax system”.
He said: “It needs to be fair across people of different incomes as half the amount of money paid in pension tax relief goes to people on upper rate tax and above.”
The state pension age was unlikely to be raised without a review of life expectancy and a focus on any impact on disadvantaged groups, agreed the panellists.
It also agreed any future Labour government would be committed to Collective Defined Contribution (CDCs) schemes support in principle.
Harrop said CDCs would be include “in a future framing of a social policy lens that lends itself to the opportunity of decent retirement incomes for larger numbers of people.”
Smith said she wanted to see a far greater focus on improving advocacy of occupational pensions but said there was disappointment the huge progress made when pension saving was going up in the early years of auto enrolment has since stagnated.
She and Harrop agreed that a Labour government may look into increasing auto enrolment from 8 to 15 per cent.
Smith said: “We haven’t got anywhere near the contribution levels needed for people to have a decent retirement.
Harrop said: “The consensus is there but you need to make sure the employers are with you.
“If there is not significant resistance it will happen.”
Smith said: “We would like to get to 15 per cent and see a greater proportion of that onus on employers.
Self employment and auto enrolment
Grace Blakeley, member of Labour's National Policy Forum, said she hoped a Labour government would work on an expansion of public investment and “how to crowd in pension pots and funding from the private sector”.
There was also likely to be some movement on bringing the pension provision of the self employed into auto enrolment.
Harrop said: “The Fabian Society published a paper, ‘good pensions for all' last year which included a pension solution for the self-employed.
He added: “In five years you could have a solution, working with HMRC as to some form of self employed auto enrolment with pension funds.”
The triple lock, panellists agreed, was likely to stay but Blakeley said any Labour government would need to do it in a way that brought all generations on board.
She said: “We have one of the lowest state pensions in the OECD, but young people are getting screwed over, paying 50 per cent of their income in tax via student loans,
“Labour would be right to maintain the triple lock but it has to come alongside promises such as housing.”
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