Richard Butcher, Managing Director, said: “Jeremy Corbyn’s rise to the leadership of the Labour Party could certainly mean interesting times for the world of pensions. There are two schools of thought in relation to the ability of Corbyn’s Labour to challenge, test and oppose the government’s thinking.
“One school argues that its hard left agenda makes it so unappealing to the electorate the government will, effectively, be able to ignore it. This school believes that they will be highly ineffective opposition. In this model, we could end up with a radical Conservative agenda driven by George Osborne. Pension tax reliefs are severely restricted in order to make good the budget deficit and freedom is extended so that people can be encouraged to encash and spend – so supporting the economy. A radical reshaping of the pension system that would, in effect, be the death of workplace pensions as we see them now.
“The second school argues that Labour’s hard left agenda will force the government to a more central position. Like an elastic band, if you pull hard enough with your left hand, your right hand eventually moves as well. This school believes they will be highly effective opposition. In this model, we could see a broad maintenance of the status quo, with it nudging gently left or right depending on the degree of elastic pull either side can exert.
“What we don’t know is what Corbyn’s Labour policy will be in relation to pensions. It is, however, no stretch of the imagination to speculate that they will see a bigger role for state pensions and a much reduced role for private (and particularly commercially operated) pensions – again the death of workplace pensions as we see them now.
“Whatever happens, it seems likely that more radical change will follow.”
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