Pensions Insight: 3 to 17 June 2024

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Gateley Legal

This insight focuses on the general election and the manifestos of the three main political parties that were released last week. It also provides our usual round-up of key pensions developments, albeit it has been relatively quiet in the run-up to the election.

General election: manifestos published

The manifestos of the Conservatives, Labour and the Liberal Democrats were all published within a few days of each other. We provide details of the pensions-related policies below.

Conservatives’ manifesto

Pensions tax guarantee

  • No new taxes on pensions.
  • Keep the 25% tax-free lump sum (which would seem to be a continuation of the new post-6 April 2024 tax-free lump sum allowance regime).
  • Maintain tax relief on pension contributions at marginal rate.
  • In addition, no extension of National Insurance to employer contributions.

State pension: triple lock

Triple Lock Plus: Involves keeping the existing triple lock on state pensions so that they increase in line with the highest of inflation, 2.5% or earnings growth. Plus, from April 2025, a new age-related personal allowance for those over state pension age would come in so that the income tax-free allowance increases in line with the state pension triple lock.

State pension: increase to SPA for women born in the 1950s (WASPI women)

A Conservative Government would liaise with Parliament to provide an “appropriate and swift response” to the Ombudsman reports into WASPI women (see here).

National Insurance

The Conservatives would get rid of National Insurance altogether starting with reducing it to 6% by April 2027 and abolishing National Insurance for self-employed completely by the end of the next Parliament.

Climate change

A pragmatic and proportionate approach to net zero by 2050 with a reduction of climate change costs for both business and households.

Mansion House reforms

The manifesto confirms that the Mansion House reforms will be implemented (for background information see here).

Labour’s manifesto

Pension reforms

In a similar vein to the drivers behind the Conservatives’ Mansion House reforms, Labour wishes to see more pension fund investment in UK markets. Its proposed changes would include pension reforms which will allow schemes to benefit from consolidation and scale which in turn should improve returns and increase UK productive investment.

Labour will also carry out a pension review to see what else needs to be done to “improve pension outcomes and increase investment in UK markets”. It is difficult to ascertain the precise scope of this review given the lack of detail at this stage.

State pension: triple lock

Maintain triple lock.

National Insurance

Labour will not “increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT”.

Climate change

Labour wishes to see the UK become the ‘green finance capital of the world’. It will make UK-regulated financial institutions (including banks, asset managers, pension funds, and insurers) and FTSE 100 companies “develop and implement credible transition plans that align with” the Paris Agreement.

Mineworkers’ Pension Scheme

Labour will review the ‘unfair surplus arrangements’ and transfer the Investment Reserve Fund back to members.

No reversal of lifetime allowance abolition

In a switch from its initial position, and prior to the manifesto launch, Labour confirmed that it will not reverse the removal of the lifetime allowance.

Liberal Democrats’ manifesto

State pension: triple lock

Maintain the triple lock.

State pension: Women Against State Pension Inequality (WASPI women)

Make sure that WASPI women “are finally treated fairly and properly compensated”.

As part of ensuring people have a decent retirement

  • Develop ways to end the gender pension gap in private pensions.
  • Investment in state pension helplines.
  • Deal with issues regarding lost top-up payments through changes to processing and receipts.

Climate change

  • The Liberal Democrats will take action to achieve net zero by 2045 and reinstate the UK’s role as climate change global leader.
  • It will regulate financial services to “encourage climate-friendly investments” including a requirement for pension funds and managers to demonstrate that investment portfolios align with the Paris Agreement.
  • New powers for regulators to act where banks and other investors do not adequately manage climate risks.
  • A requirement for “all large companies listed on the UK stock exchange” to “set and report on net-zero targets”.

Gig economy and pension portability

The manifesto mentions pensions for gig economy workers so they “don’t lose out, and portability between roles is protected”. It is not entirely clear whether the portability reference is to gig economy workers or has wider relevance to the defined contribution (DC) small pots issue.

Company director fined £15,000 by TPR for withholding information

A former company director of a sports company has been fined £15,000 for withholding information required by the Pensions Regulator (TPR) under section 72 of the Pensions Act 2004, contrary to section 77(5) of the Pensions Act 2004. The defendant pled guilty which means that TPR will no longer pursue him for fraudulently evading his duty to pay over employee salary deductions as pension contributions to the pension scheme.

“This case sends a clear warning that we do not hesitate to prosecute companies or individuals if they refuse to give us the right information when requested and/or try to frustrate our aim to protect pension savers.

“We attempted to use our civil powers to put things right in this case, but this was ignored. Anyone refusing to comply with our requests for information without good reason should take note that they could find themselves in court and with a criminal conviction.” [Source: TPR]

PASA guidance on data accuracy

The Pensions Administration Standards Association has published data accuracy vs data presence guidance on why data needs to be accurate, not just present, together with action that can be taken to make sure that accuracy is retained.

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