Pensions - Articles - Reaction to Labour winning the General Election


Following Labour’s General Election victory, please see the below comments from Broadstone, TPT Retirement Solutions, Isio and My Pension Expert

 David Brooks, Head of Policy at leading independent consultancy Broadstone, previewing where the new government is likely to take pensions policy.

 He said: “With this morning’s General Election results confirming the long-expected news that Labour will form the next government, attention now turns to how it will deliver its pension promises and duties over the next five years.

 “The manifesto contained a pledge to conduct a wide-ranging “pensions review” and we expect that this is likely to cover auto-enrolment given concerns over pension adequacy as well looking at ways consolidation can improve outcomes in the workplace pension market.

 “Productive finance was another area Labour focused on in their manifesto but this push for comes with a caution warning as there may be a disappointing uptake from defined benefit schemes however an ongoing review into VFM may allow more schemes to allocate long-term illiquid assets to this space. We would counsel caution in this space as these assets are not a one way bet and the long-term interests of pension savers will need to be carefully balanced with the short-term needs of the country.

 “With no mention of the Lifetime Allowance in Labour’s manifesto, we can probably assume it will not continue with previously announced plans to reverse the Conservatives’ abolition of this tax, but further detail will be needed around concluding the small print on its implementation.

 “With a Pensions Minister to be appointed and a Kings Speech in just two weeks’ time, policy is likely to move quickly but we broadly expect continuity in the pensions market. There are already significant legislative processes underway which we anticipate will be continued – with the possible exception of the controversial pot for life proposals.”

 David Lane, Chief Executive of TPT Retirement Solutions, said: “Following the change of Government, we hope for a continued focus from Labour on innovation in the pension consolidation space. Reform in this area could allow pension schemes to benefit from increased scale to deliver better returns for savers.
 
 “Like their predecessors, Labour hopes to encourage pension schemes to provide more productive investment in the UK economy. We expect trustees will be open to increasing allocations, however, they will still have to prioritise investment performance, in line with their fiduciary duty. Labour’s proposed requirement that all UK-regulated financial institutions and FTSE 100 companies develop and implement credible climate transition plans could also increase the opportunities for responsible investment.
 
 “Labour’s most significant pension reforms could come from its planned review of the workplace pensions system. This review will be welcomed if it creates a long-term plan for the new Government’s time in office. In particular, we hope the review will be meaningful and include a closer examination of the benefits of creating multi-employer Collective Defined Contribution schemes. Employers, pension savers and the wider economy could benefit from the introduction of these schemes.”

 Iain McLellan, Director at Isio, comments: “With Labour securing a sizeable majority their promised pensions review has the potential to be more radical and grasp some of the thornier pensions issues. The government may feel it has clear license to pursue the most ambitious form of its vision for UK pension schemes and their members. That could include sweeping changes to improve member outcomes, ensure schemes take advantage of consolidation and scale, and increase productive investment in UK markets, though it’s worth noting that the consolidation and productive investment themes are ones that were also being pursued by the previous government.

 “In the meantime it will be interesting to see who is appointed as Pensions Minister and what existing pensions policy developments they look to accelerate, put on the back-burner or bin altogether. Labour has dropped its plans to reintroduce the Lifetime Allowance and has no current plans for further changes to pensions taxation. However, this falls short of an outright commitment to leave pensions tax alone, and pensions might be seen as a convenient target for ‘stealth’ taxes when fiscal circumstances are tight.”

 Lily Megson, Policy Director at My Pension Expert said, “A Labour victory was as close to inevitable as you could get. Yet, Starmer and his party must not be complacent. Britons have experienced a great deal of financial hardship throughout the final years of Conservative governance. Financial planning – particularly retirement planning – has been an uphill battle for many Britons.
 
 “As such, it is vital that the incoming government work rapidly to ensure economic stability. Further, pension policy must be airtight.
 
 “Leading the party’s plans for pension policy is a comprehensive pensions review – a much-needed initiative that should be a top priority. With millions not saving adequately for retirement, the review must result in reforms that improve access to financial education, boost pension engagement, and simplify savers’ experience of the sector. Indeed, closing the engagement gap must be top of the agenda for the new government.
 
 “One way the new government can simplify the pension system is by supporting the timely rollout of the Pensions Dashboards, which have faced significant delays under Westminster’s predecessors. Additionally, the government must enforce greater scrutiny and accountability for providers imposing excessive transfer delays.
 
 “Above all, what we need is for the new government to actually deliver on its promises to transform pensions. Appointing a dedicated pensions minister with a clear action plan will be a crucial first step toward providing Britons with the knowledge and tools they need to achieve financial security in retirement. After a long period of instability and disillusionment, now is the time for definitive action. Your move, Labour.”
 
  
   

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