5 Things The Conservatives' Election Win Means For Pensions
After David Cameron sealed a further five years in Downing Street, we look at what his party’s sweeping election victory means for the pensions world. Here are five things to expect.
1. The Lifetime Allowance Is To Be Cut
That the Conservatives have remained in – and increased their – power, the Lifetime Allowance will continue to be cut, affecting younger savers. From April 2016, this will be lowered from £1.25 million to £1 million which means that there are financial penalties for paying more than this amount into your pension pot.
Although many young savers believe they will never reach that amount, that people are beginning to save earlier – thanks, in part, to Auto Enrolment – reaching this limit is not as unrealistic as once thought.
2. The Pension Freedoms Are Here To Stay
April 6th of this year saw the biggest ever shake up to the UK pension’s industry, with increased freedoms for savers in terms of how they access their pension pots. Although it was never likely that Labour would have removed all these new freedoms, there had been some concerns that some of the new rules could have been reversed. Obviously that will not now be the case.
3. State Pension Will Continue To Rise
All parties had vowed to retain the triple lock formula which guarantees that the state pension will rise by whatever is highest out of a) consumer price inflation, b) average wages or c) 2.5%.
This is, of course, good news for those coming up to retirement.
4. Other Pensioner Benefits May Be Cut
While the state pension is here to stay, at least for the next while, other benefits received by pensioners could be on their way out. For example, the Tories want to introduce a “temperature test” when it comes to the dishing out of winter fuel allowance so that those pensioners who have emigrated to countries such as Spain and Portugal would no longer receive that allowance.
5. Ros Altman Is The New Pensions Minister
Following the failure of former Pensions Minister Steve Webb to hang on to his parliamentary seat, Ros Altman has been appointed David Cameron’s new Pensions Minister.
The ex-Tony Blair adviser and pensions campaigner will be charged with keeping up the work started by Steve Webb and is very well respected in the industry and expected to do well. Even before her appointment she was rated as the 5th most influential person in the pensions industry by Right Retirement, even ahead of Steve Webb himself at 12th position (and ahead of our own Russell Davidson at 95th position).
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By taking 5 minutes to complete our survey on the future of employee benefits you'll be entered into a prize draw to win a weekend's stay at one of Malmaison's 13 UK locations.
Photo credit goes to Brett Jordan