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Pensions in the Labour Manifesto

Tom McPhail

The labour manifesto has been published. Pensions feature heavily as we expected from the leaked manifesto. From Tom McPhail – Head of Policy at Hargreaves Lansdown.

Their key commitments are to; Maintain the triple lock; Stop all planned increases to the State Pension Age after 66; Guarantee winter fuel allowance and free bus pass for everyone; Protect pensions for all UK citizens living overseas; Extend pension credit to compensate women born in the 1950s who have seen their State Pension Age rise.

Develop large efficient workplace pension funds; Raise the minimum wage to the equivalent of the living wage (expected to be at least £10 per hour by 2020). This will include more part-time workers in saving for retirement and raise the amount being saved for retirement by those on low incomes. The promises are fully costed with an estimated £5.6bn of the spending coming from the so called Robin Hood Tax on financial transactions.

Tom McPhail – Head of Policy at Hargreaves Lansdown: ‘Labour’s plans will result in us all having less money to live on in retirement, with the proposal to freeze state pension age at 66 estimated to reduce everyone’s State Pensions by £800 a year if it is to be cost neutral. It’s not much good retiring earlier if you can’t afford to live. This package of measures is likely to ultimately lead to increased pensioner poverty. Jeremy Corbyn may want to apply a Robin Hood tax but the reality is he’d be raiding the pension funds of ordinary people to swell state coffers: he’s more Sheriff of Nottingham than Robin Hood.

Increasing the minimum wage could increase the pension savings of the lower paid and include more part-time workers in saving for retirement. Labour also propose to achieve efficiencies in the pension system by looking for ways to merge workplace pensions into fewer, bigger schemes. This is a good idea; there are undoubtedly too many schemes and some of them, such as some of the smaller company schemes are not particularly well run. However there doesn’t appear to be any recognition here of whose money it actually is. There is nothing here about putting individuals in control of their retirement savings, or about encouraging and rewarding those who do the right thing and put money aside for later life. If Labour have a coherent, joined up policy on saving and investing, they forgot to put it in their manifesto.’