The 2019 general election will take place on 12 December and within the last 24 hours, both the Liberal Democrats and Labour have released their party manifestos.
With the electorate set to go to the polls in three weeks’ time, Retirement Planner looked at both Labour and the Liberal Democrat manifestos – the Conservative manifesto is yet to be released – to uncover where the two parties stand on pensions and taxation.
The Liberal Democrats have pledged to maintain the triple lock – a policy that ensures the basic state pension will rise in line with the highest of wages, Consumer Prices Index inflation, or 2.5%. AJ Bell senior analyst Tom Selby described this as “an easy political win” from a party keen to shore up the ‘grey-vote’. Labour too pledged to maintain the triple lock, as was its policy in the previous general election.
According to Labour’s manifesto, those earning more than £80,000 will pay “a little more” in income tax, while those beneath the threshold will have their National Insurance and income tax rates frozen.
The Lib Dems have ring-fenced £7bn the party intends to raise via a 1p in the pound on income tax to be spent only on NHS and social care services. In the longer term, the party intends to establish a cross-party health and social care convention to reach an agreement on the long-term sustainable funding of a joined-up system of health and social care.
In its manifesto, Labour pledged to “end the social care crisis”. The party said it would ensure no one will pay more than £100,000 for care costs in old age.
Tapered Annual Allowance
Reference to the controversial and complicated pension taxation policy was absent in both Labour and Liberal Democrat manifestos.
Pensions for the self-employed
It is well documented the self-employed are not saving enough towards their pension, indeed research by the Association of Independent Professionals and the Self-Employed showed in June 2018 69% of the self-employed had no pension. In their manifesto, the Liberal Democrats pledged to “review the rules concerning pensions so that those in the gig economy don’t lose out”.
Labour, meanwhile, said it would expand access to automatic-enrolment for the self-employed and low-income workers. It also said it would “stop people being auto-enrolled into rip-off schemes”.
The Liberal Democrats pledged its allegiance to the WASPI – Women Again State Pension Inequality – cause, vowing to ensure “women born in the 1950s are properly compensated for the failure of government to properly notify them of changes to the state pension age, in line with the recommendations of the Parliamentary Ombudsman”.
Similarly, Labour said it would “work with [1950s] women to design a system of recompense for the losses and insecurity they have suffered”. It said it would ensure nothing similar happened again by legislating to prevent accrued rights to the state pension from being changed.
State Pension Age
Labour said it will review retirement ages for physically arduous and stressful occupations, including shift workers, in both the public and private sectors.
It also said it would abandon Conservative plans to raise the state pension age further, leaving it at 66.
Labour said it would ensure the pensions of UK citizens living overseas will rise in line with pensions in Britain.
Labour committed to creating “a single, comprehensive and publicly run pensions dashboard that is fully transparent, including information about costs and charges”.
‘Labour leading on pension generosity’
Quilter head of retirement policy Jon Greet described the Lib Dem’s promises on pensions as “awfully vague” and suggested the party was “bereft of ideas on how to affect policy in this area”.
“They give a vague assurance they will act on the pension’s crisis that is crippling the NHS, but again offer no solution when it is clear the tapered annual allowance is not fit for purpose,” he continued.
“Policies on which they are sure on, for example retaining the triple lock and providing compensation for women born in the 1950s are completely unsuitable in the current economic climate and the Lib Dems offer no indication of how much it will cost.”
More generously, Royal London pensions specialist Helen Morrissey said it was good the Liberal Democrats committed to maintaining the triple lock. She noted, however, the lack of proposals to overhaul the pensions tax relief system that featured in the party’s 2017 manifesto.
For Aegon pensions director Steven Cameron, Labour was “leading the charge” in terms of generosity of state pension commitments, noting retaining the state pension age at 66 and allowing earlier access to those in stressful or arduous occupations would be “welcomed by those concerned over their ability to keep working longer and who lack sufficient workplace or private pensions to allow them to choose to retire before state pension age”.