Following the surprise general election result, Retirement Planner asked pensions and savings experts to talk through their expectations and concerns for a range of financial policies and manifesto pledges.
The Conservative party’s failure to win an overall majority in the 8 June election – a result few commentators had predicted – is likely to throw the UK into a fresh period of political, legislative and market uncertainty.
With talk currently of the Tories forming an informal coalition with Northern Ireland’s Democratic Unionist Party (DUP), it cannot simply be assumed the previous administration’s policies and manifesto pledges will continued as originally intended.
Aegon head of pensions Kate Smith expressed concern policy details on pension scams could “fall off the table” and called on the new government to introduce more powers to allow pension providers and schemes to block suspicious transfers.
She also highlighted the need to press on with the pension dashboard, despite treasury minister Simon Kirby, who was driving the scheme, losing his seat.
Sanlam head of commercial Elliott Silk said the decision to call a snap election had “put key personal finance initiatives on the backburner including the finance bill and pensions dashboard”.
He warned that the hung parliament likely meant further delays and could risk the dashboard “losing momentum”.
No major reforms
Former pensions minister and Royal London director of policy Steve Webb said a minority government was likely to mean reforming social care funding or indeed any big shake-up of pension tax relief would be avoided.
“The most we are likely to see is further tinkering as the government looks to fill its budget shortfall with further salami slicing of pension tax relief for higher earners,” he said.
Aegon pensions director Steven Cameron agreed reforms to the state pension and social care funding were unlikely to be short-term policies for the new administration while Hargreaves Lansdown head of policy Tom McPhail said he felt a comprehensive review of pension taxation was unlikely for “the foreseeable future”.
He did, however, believe the auto-enrolment review would run its course and it was likely the election result would bring “more inclusive changes” to the pensions system, such as bringing lower earners and the self-employed on board. McPhail also suggested the triple lock may remain a policy for longer than 2020.
Won’t unpick triple lock
Broadstone technical director David Brooks said that, while making predictions was “a fools game”, he felt a Tory party bolstered by the DUP would likely result in the triple lock sticking around since it had been included in the DUP manifesto.
He added: “For all this talk of the triple-lock, it is likely we will have another election before even the next state pension increase is given, making any understanding of what the future looks like extremely difficult to predict.”
Fidelity International head of pensions policy Richard Parkin also thought the abolition of the triple-lock and the increase to state pension age now appeared “difficult given the severe reaction to the long-term care funding proposals”.
Parkin also called for clarity on the rules surrounding the money purchase annual allowance (MPAA).
Clarity needed on MPAA
For her part, Nucleus Financial product technical manager Rachel Vahey said there was now a serious question as to whether the proposed reduction in the MPAA and also the tax-free dividend allowance would make it into law this year.
She said: “This places advisers and their clients in limbo, trying to work out how much the MPAA is for the 2017/18 tax year – £10,000 or £4,000. But the longer this hiatus lasts, the less likely it seems the government can backdate this piece of legislation to the start of the tax year when – or if – it is eventually passed”.
Alongside calling for “urgent” clarity on the state of the MPAA and asking the government to implement the ban on cold calling “as soon as possible”, AJ Bell senior analyst Tom Selby described the hung parliament as “the worst possible outcome for pensioners and people saving for their retirement”.
He said: “It means key decisions around the state retirement age, the state pension triple-lock, social care funding and pension tax relief are all going to take a back seat while the wheels of Westminster slowly turn.”
The post Tories won’t unpick triple lock in hung parliament appeared first on Retirement Planner.