Election 2017: Advisers shrug off concerns over impact on pension policy

Prime Minister Theresa May announced her decision to call for a General Election on 18 April, saying it was the only way to ensure the country got the political stability it needed.

In response, Royal London director of policy and former pensions minister Steve Webb warned pension policy could yet again be thrown up in the air under a new government.

He said: “If Theresa May secures a bigger majority, radical reform of things like pension tax relief becomes much more likely.”

Webb also questioned whether opposition parties would have time to fully outline pension plans in their manifestos in the next month.

“What is clear is that a new government and a possible new ministerial team are likely to mean yet more unwelcome uncertainty over the future of pension tax relief,” he said.

But advisers responded with defiance. “There was as much uncertainty yesterday as there is today but until something concrete comes out everything else is speculation,” said Concept Financial Planning managing director Paul Richardson.

IFS Wealth & Pensions director Alan Chan also said it would be hard to gauge the impact on pension policy at this stage.

He said: “I’m sure the decision was an initial shock to everyone but really we’ll have to see how it plays out after 8 June.”

Not about pensions

Yellowtail Financial Planning managing director Dennis Hall said the upcoming election might not have pension policy at the “top of mind”.

“May is clearly expecting a stronger mandate to come from this vote but not around budget and fiscal policy, instead more around Brexit,” said Hall.

Aspect 8 chartered financial planner Claire Walsh agreed. She said: “It seems the decision is aimed at consolidating May’s position, to give her more legitimacy to govern effectively against claims that she’s unelected.”

But she added: “Clients most likely won’t call their financial advisers on this news, as it doesn’t really impact finances in the short to medium term, and in the long-term there’s nothing you can do to control it.”

Triple lock In dangerWebb had warned the state pension triple lock in particular could be “up for grabs” between opposing parties, as the Conservatives looked to scrap it after this parliament yet Labour pledged to retain it until 2025.

Hall agreed. He said: “I suspect triple lock could raise its head, with the intention to reduce its effectiveness. It might just come back to a simple consumer price index link.”

What happens with the triple lock “really comes down to affordability”, he added.

This followed the Work and Pensions Select Committee Intergenerational Fairness report that called for a review of the triple lock, proposing for it to be brought to a level relative to average full-time earnings and then be replaced with an earnings link in 2020.