Labour has said it will launch a review into pensions and retirement savings and look to simplify the Isa landscape if the party is elected.
As part of its plan for financial services, the party said it will look into whether the current pensions framework delivers sustainable retirement outcomes for individuals.
For DC schemes, it said it will give TPR new powers to consolidate schemes that are not bringing ‘sufficient value’ to its members, as well as keep the minimum thresholds for scheme performance under review to ensure improvement in returns where possible.
The review will look across the pensions world and will consider all types of pensions and retirement savings plans such as defined benefit, defined contribution, and public sector schemes including LGPS.
Labour wants to enable schemes to have access, expertise, and risk profile to increase their investments in long-term illiquid assets and therefore deliver higher returns for savers.
Lizzy Holliday, director of public affairs and policy at Now Pensions, said: “We welcome the concept of a pension and retirement savings review; pensions are a significant and essential part of all of our lives, and the wider economy.
“But often this isn’t realised until it’s too late. However, to have the greatest impact on millions of savers we believe joint work on developing a roadmap for auto-enrolment, including tackling the challenging topic of pensions adequacy, will be key.”
Advice/guidance
In a bid to reinforce financial inclusion in the UK, Labour said it will support the FCA’s proposals to address the advice gap through its review and said it will ‘closely monitor’ the progress.
Labour also recognised the importance of ensuring alignment between the new proposals and the remit of the Money and Pensions Service to "continue to provide free and impartial guidance on money and pensions".
It said it will work with regulators and industry to support financial services firms to use technologies like AI to produce accessible and affordable financial guidance tools.
Labour also plans to set up a new Regulator Innovation Office to promote transparency on regulator performance.
Isas
The party says it plans to simplify the Isa landscape to make it "as easy as possible" for people to feel the benefits of saving including through increased use of stocks and shares Isas.
Laura McLaren, head of DB actuarial consulting at Hymans Robertson said: “Now more than ever a cross-party consensus and roadmap would be welcome to ensure the industry is well positioned for the long term.
“There’s a significant opportunity here for the government – whoever that is – to take steps towards forging a better saving and investment environment aligned with wider societal aims."
After “modest” Isa reform in the chancellor’s Autumn Statement, last month AJ Bell called for long-term Isa simplification in the Spring Budget.
The firm wanted to see an increase in the Isa allowance and any ideas of a Great British Isa scrapped.
Tom Selby, director of public policy at AJ Bell, also suggested the Lifetime Isa could be “supercharged” by reducing the government's early exit charge and increasing the minimum property price.
He said: “Labour has also said it will look to simplify the ISA landscape to make it as easy as possible for people to invest. This is a hugely encouraging move and something that AJ Bell has campaigned for consistently over a number of years.
"No sensible person designing a savings system from scratch would propose the plethora of different Isas we have on offer today.
“Many people find the array of choice on offer confusing, and a ‘back to basics’ approach would help build on the core feature of Isas, which is their simplicity.
"A full review of Isas should be seen as an opportunity to prevent them being suffocated by incremental complexity, which could eventually see Isas turned into a political football in the same way as pensions taxation."
It comes as Labour leader Keir Starmer said economic growth was the priority before looking to cut income tax and raise thresholds in his New Years speech last month (January 4).
He said: “The first lever we want to pull is growth in our economy because that is what has been missing for 14 years. Without growth we won’t have the money to run our public services.
“Any tax cuts have to be fair and affordable but the place to go is growth.”
alina.khan@ft.com
