On the go: Radical pensions reforms are likely to be avoided by political parties in their election manifestos, according to Royal London analysis.
A policy paper published on Sunday suggested manifestos “will resemble something of a bidding war”, in contrast to the “tough choices” rhetoric of the 2017 campaign.
With neither of the larger parties confident of a majority, Royal London said the losers and gainers created by policies such as tax relief reform would make change politically unpalatable.
Government support for wholesale tax reform has waned since George Osborne’s tenure as chancellor, but the issue has been brought back into focus by the NHS pension scheme after it emerged doctors were cutting their hours to avoid punitive tax charges. A consultation was launched in response but has so far only led to scheme-specific changes.
In its report Royal London said: “The main element of the tax relief system where announcements are possible would be changes to tackle the issue around NHS doctors and consultants (and others in a similar position) caused by the ‘tapered’ annual allowance.”
“Whilst it is easy to come up with reforms that generate more gainers than losers (such as flat rate tax relief), reform can still generate large losses for some groups,” it added. “In a ‘safety first’ manifesto, the instinct of the larger parties will be to steer away from these issues. It will however be interesting to see if the very radical and somewhat controversial proposals by the Liberal Democrats for changes to pension tax relief will make it from the conference floor to the party manifesto.”
Consensus policies here to stay
However, there are areas of cross-party agreement in pension policy that could lead to some overlap between the manifestos, according to Royal London.
These include support of automatic enrolment, the development of the pensions dashboard and for new models of collective workplace pension provision – all areas included in the Pension Schemes Bill that had started to make its way through parliament before it was dissolved.
Royal London believes Labour and the Scottish National Party are likely to restate their opposition to future increases in state pension age and will continue their support for those born in the 1950s currently campaigning against the rapid rise in women’s state pension age.
They are also likely to confirm that they would retain the triple lock on pension increases, a feature the Conservatives campaigned to scrap in their last manifesto.
Sir Steve Webb, Royal London’s director of policy, said: “The 2017 Conservative manifesto did contain tough measures such as scrapping the triple lock and means-testing winter fuel payments. Whether or not these are repeated in 2019 will be a key indicator of the Conservatives’ electoral confidence.
“Areas in need of systematic reform such as pension tax relief are unlikely to be debated in any depth during the election campaign, and any proposals are likely to be announced when the campaign is over rather than before votes are cast.”
