As prime minister Boris Johnson secured a victory for the Conservative Party, experts turned their attention to his pension policies, urging the party to now deliver on “long awaited promises.”
While the focus will undoubtedly be on Brexit over the coming weeks, Aegon’s pension director Steven Cameron said Johnson must look beyond the country’s exit from the EU to focus on domestic priorities which have been left languishing.
He said: “Over the coming five years, and starting right now, the government and industry need to work together to make sure people across the UK, irrespective of age, gender, wealth or employment status, are fully engaged with their retirement saving, making adequate provision for the financial futures they aspire to.”
Following the Conservative Party’s pledge to retain the ‘triple lock’ for the state pension, Cameron also called upon the government to confirm that pensioners will see their state pension rise by an “inflation busting” 3.9% next April.
The industry will also be awaiting further clarification on the party’s manifesto promise to ensure non-taxpayers in ‘net pay’ schemes receive the 20% tax relief on their pension contributions to which they are entitled. Currently, a number of workers, disproportionately women, who earn between £10,000 and £12,500 have been missing out on pension benefits because of a loophole affecting people with net pay pension schemes.
Equally, the issue of the NHS pensions crisis will also need to be addressed, which has led to a number of senior doctors declining additional shifts for fear their extra earnings could result in higher pension tax charges.
In its manifesto, published in November, the party pledged to address the ‘taper problem’ in doctors’ pensions and hold an urgent review if they remained in power.
Cameron said: “Tax rules and reliefs must be fit for the future and work together without unintended consequences across all earnings bands. It can’t be acceptable that complex technicalities are leading to senior health professionals in the NHS refusing extra work or retiring early to escape pension tax charges. A full review is urgently needed, and not just a temporary sticking plaster for the NHS.”
Helen Morrissey, pension specialist, Royal London, commented: “While Brexit will undoubtedly be top of his to-do list we urge the prime minister to make good on his manifesto promises to help low paid workers in net pay arrangements as well as addressing the long running saga of NHS doctors affected by the tapered annual allowance.”
Extending auto-enrolment has long been a topic of debate, with calls for it to offered to low earners, those with multiple jobs, and the self-employed.
Cameron said: “The self-employed remain out in the cold when it comes to auto-enrolment, but with their numbers growing faster than that of employees, this needs to change. The search for a solution which works for the self-employed needs to be given greater priority.”
Elsewhere, demands for a pensions dashboard continue from those in the industry. With millions of individuals building up multiple pensions over their working lives, a pensions dashboard will enable people to reconnect with lost pension pots and better engage with their retirement savings.
According to Cameron, the Government should bring back legislation in the next Queen’s Speech to turn pension dashboards into reality.
“We need to unleash the power of pension dashboards, creating a step change in engagement by presenting individuals with a complete private and state pension picture, online at the touch of a screen,” he said.
Jon Greer, head of retirement policy, Quilter, added: “We need the government to snap into action and deliver on some long awaited promises. The pensions Bill, which includes the pension dashboard, was finally going to get the last seal of approval before the election, meanwhile most people have given up on the social care green paper as a lost cause. With the political posturing over hopefully these policy areas will get the attention they deserve.”