Published by Malcolm McLean on
Most commentators are suggesting that the election will be dominated by Brexit and the future of the United Kingdom outside the European Union.
But there are many other domestic issues that the election campaign will also throw into focus. Pensions are likely to feature in a number of different respects.
The termination of the parliament will bring to an end to the very restrictive commitment that former prime minister David Cameron gave that there would be no further increases in tax, national insurance or VAT during the course of this current parliament. This opens the door for changes being made to pension tax reliefs and allowances. A cash-strapped chancellor looking to reduce the nation’s deficit might see this as an opportunity in his autumn budget to make savings by introducing a single, uniform rate of tax-relief for all – say at 30 per cent in place of the present 20, 40 and 45 per cent rates– and a reduced annual allowance of £30, 000 or less to further limit the amount of tax-relief being paid out. This may not be as injurious to pension saving as it sounds given that ultimately it may lead to the lifetime allowance being abolished and/or the high earners’ annual allowance taper similarly disbanded.
It will be interesting to see whether the Conservative election manifesto makes any reference to their plans in regard to tax or even resurrects the possibility of increasing self-employed workers’ NICs which they made an early U-turn on following their last budget.
In relation to the state pension the Conservatives may feel bold enough if they feel sufficiently confident of winning a largish majority to scrap what was supposed to be the temporary uprating arrangement of the triple-lock – and replace it from 2020 with a link to rises in average earnings. They will be wary, of course, of losing some of the grey vote bearing in mind that Labour has already committed itself to renewing the lock, should they be elected, until 2025.