The pre-election Pensions Bill that was set to pave the way for pensions dashboards and introduce collective DC arrangements is likely to be swiftly revived following last night’s Conservative landslide victory, predict experts.
A working parliamentary majority will also see the annual allowance taper, auto-enrolment contributions increase and possible broader tax reform all back on the agenda.
Industry figures are calling on the Conservative Party to make good their campaign pledges to address the taper and the net pay tax relief anomaly for low-paid workers. Calls for auto-enrolment contribution earnings bands to be removed are also growing.
Hargreaves Lansdown head of pensions policy Tom McPhail says: “Undoubtedly we will see the reintroduction of Guy Opperman’s oven-ready Pension Bill which ran out of time at the end of the last parliament. This Bill will strengthen protections for occupational scheme members, pave the way for pensions dashboards to be developed and open up the option of a new type of shared-risk pension scheme.
“In addition we expect to see pension tax reform back in the table. This is for a couple of reasons. Firstly the Conservatives have already acknowledged the problems with the Annual Allowance Taper and its impact on higher earners such as doctors; they had also acknowledged the problem of lower earners missing out on tax relief because of the way their employer operates their scheme. They have to fix these problems. Tinkering will only make the pensions system more dysfunctional than it already is; the best answer would be a fundamental reform of the tax treatment of pensions across the board.
“The pressure is on the Chancellor to be positive and ambitious, the spending taps will be turned on and we expect a big Budget in February. The Conservatives have also promised not to raise income tax, National Insurance or VAT so at the margins they will look for fiscal savings – pensions cost tens of billions of pounds and there is the opportunity to save money here. Finally, the new Government has the political capital to tackle knotty domestic issues such as pensions and social care which would otherwise have been too difficult to even attempt.
“We believe there is a way the UK’s pension system could be made simpler, fairer and more efficient, with proper incentives to save for all; there is now the opportunity to pursue this reform.”
PLSA director of policy & research Nigel Peaple says: “The new Government must also ensure that a non-commercial Pensions Dashboard hosted by the Money and Pensions Service is set up, and that no others are allowed to operate until a full consumer protection regime is put in place.”
Hymans Robertson partner Sue Waites says: “I welcome the Conservative manifesto’s commitment to urgently review the complex taper affecting doctor’s pensions, however the problem does stretch far wider than that. Now that they’re in government, we’d like to see them take this opportunity to demystify the complexity surrounding tax relief and in particular to commit to simplifying the overly complex issue of annual allowance that is effectively stopping key workers such as NHS Doctors from working more hours due to tax.”
Aegon public affairs director Steven Cameron says: “Had there not been an unusual December Election, state pensioners would have known by now how much their state pension will go up to next April. With a renewed commitment to the ‘triple lock’, the increase will be the highest of 2.5%, price or earnings inflation. Rather than keeping state pensioners in suspense, we’re calling on the Government to spread some pre-Christmas cheer and confirm what’s expected to be an inflation busting 3.9 per cent increase.
“The Conservative manifesto committed to making sure 1.3m non-taxpayers in ‘net pay’ schemes receive the 20 per cent tax relief on their pension contributions to which they are entitled. The lowest earners deserve every help they can get to save for their retirement so this must be another top priority.”
