Pre-election Special

With election fever abound, we thought it would be interesting to see what the main parties have planned for the world of pensions. As you would expect when some parties have almost no chance of a majority, promises range from the sensibly costed to the outlandish, but we will leave the best till last!


Given that Brexit is dominating the agenda, it’s no surprise that that the Conservatives have been... well, conservative. Nothing radical here.

They have promised to review the current restriction to pension contributions, known as the Annual Allowance Taper. This is causing all sorts of confusion and is resulting in well published tax bills for high earners, most notably doctors, who have found they have had to reduce their hours to contain excessive tax bills.

The Tories have also committed to reviving the Pensions Bill which fell at the tail-end of the last parliament. This Bill will strengthen the regulatory protection of members of company pension schemes, introduce Pensions Dashboards to enable savers to see all their pension accounts in one place, and pave the way for a new type of risk-sharing pension scheme which the Royal Mail and its unions are keen to introduce for its employees.

They have also promised a review of the quirk of the pension tax system which means lower earners in some company pension schemes can miss out on any government tax relief top up on their pension contributions, known as the net pay problem.


Labour as you would expect are planning a raft of giveaways.

They propose to maintain the ‘triple lock’ increases to the state pension, meaning it will rise every year by the highest of inflation, earnings growth and 2.5%. This means the state pension is likely to increase in value relative to both the incomes of people in work and to the retail price index.

In addition, they have promised to uprate the state pension for UK pensioners abroad who currently miss out because of where they live. They’ve also committed to freeze increases to the state pension age at 66, They’ve also said they’d pay compensation to those women born in the 1950s, who have seen their state pension age raised (the WASPI campaigners).

There’s not much here to object to but there are grave concerns particularly about the state pension age. The cost of the age freeze at 66 is likely to cost tens of billions of pounds and the compensation to the ‘WASPI’ women is reported to be up to £58billion. Neither policy appears in Labour’s manifesto costings!

Lib Dems

On pensions, the Liberal Democrats will also keep the state pension triple lock for the term of the next parliament.

They’ve also said they’d pay compensation to WASPI women, who’ve had to deal with the fairly abrupt increases to their state pension age. However, the manifesto doesn’t specify the exact terms on which compensation would be paid, saying it would be for the parliamentary ombudsman to decide.

Consistent with their environmental focus, the Liberals would require all pension funds to be managed in line with the Paris Agreement on climate change.

Jo Swinson’s party has also stated that it wants to improve pension rights for those working in the gig economy.


For what it’s worth, the Greens are promising to increase the weekly state pension to £178 across the board for all – nearly £10 more than they currently get. This would then be increased in line with inflation. This doesn’t sound too radical until it is understood that the new amount will be paid regardless of whether a full NI contribution record has been paid or if pensioners have previously contracted-out!

An overview of tax relief on pension contributions has been in the pipeline for a number of years now, so it is no surprise to see that the Green party is proposing to reduce tax relief down to 20% across the board.

Most controversially, the Greens have stated that they will cap the amount that can be drawn as a tax-free lump sum to £40,000. There is no doubt that this is a retrograde step and will remove one of the few benefits that really help with pension engagement. Thankfully on this point, Caroline Lucas and co will be fighting a lonely battle.

Monster Raving Loony Party

No election would be complete without the Monster Raving Loony Party. In keeping with the other parties’ commitment to the triple lock on pensions, the Loony party of course will go one better and have declared that instead of the triple lock, they will buy a padlock!

In addition, as they think that beds are now safer places to keep your money under rather than in a bank, they propose to provide new mattresses for all pensioners on less than 20p per week! Wow.

Actually, bearing in mind their Loony party counterparts in Germany polled 2.5% in recent elections (yes that is true!), the balance of power for the Loonies may not be such a pipe dream! Now that’s a sobering thought.

The information above is based on our understanding of the legislation applicable to UK Registered Pension Schemes, and HM Revenue & Customs rules. It is provided as a summary only and should not be taken as advice - Morgan Lloyd SIPP Services Ltd and Morgan Lloyd Administration Ltd are not authorised to give financial advice and will not be responsible for any decision or action taken as a result of relying on this information. If you are a retail client you should seek financial advice from a financial adviser who is authorised by the Financial Conduct Authority and/or seek guidance from the Government’s Pension Wise service.