Publications -> Newsletter Articles
Below is a comparison of the pensions statements made by the three main party manifestos.
|
|
|
|
- From 2012, the Labour Government will require employers and employees to make automatic minimum contributions to occupational or new, government-run Personal Pension Accounts, which meet certain minimum requirements. The scheme will be run by the National Employment Savings Trust (NEST).Source: PADA
- Labour aims to re-link the basic state pension to earnings. The government aims to do this by 2012 or by the end of the next parliament at the latest.Source: labour.org.uk
- In the 2010 Budget the Chancellor confirmed that people with incomes over £130,000 will have their pension tax relief restricted from 2011.
- The Labour manifesto contained a promise to end default retirement at 65, with a review to determine the best way to support people working longer.
- The Pension Credit capital disregard will increase from £6,000 to £10,000 under a Labour government, and Pension Credit, which ensures that no pensioner need live on less than £132.60 per week, or £202.40 for couples, will also rise with earnings.Source: Labour Party manifesto 2010
- The Labour Party manifesto contains a pledge that between now and 2020 the State Pension Age for women will rise to 65; and between 2024 and 2046, it will rise to 68 for both men and women.Source: Labour Party manifesto 2010
|
- The Conservatives plan to review Labour's pensions policies (including NEST) if they take office. However they have stated that they are not completely opposed to the principles underpinning Government policy and NEST.Source: conservatives.com
- The Conservative manifesto contains a pledge to work with employers and industry to support auto-enrolment into pensions.Source: Conservative Party manifesto 2010
- When affordable, the Conservatives plan to restore the link between the basic state pension and average earnings and to reverse the effects of the abolition of the dividend tax credit for pension funds. They will also end the obligation to buy an annuity at 75.Source: conservatives.com & Conservative Party manifesto 2010
- The Conservative manifesto contained a commitment to review the state pension age, to consider whether the increase in the pension age from 65 to 66 should be brought forward from 2026. This change, however, will not be enacted before 2016 for men and 2020 for women. Source: Conservative Party manifesto 2010
|
- The Liberal Democrats would immediately restore the link between pensions and earnings.
- They would scrap the compulsory retirement age.
- They would also give people greater control over their pensions by scrapping the rule requiring people purchase an annuity at 75 and by widening the circumstances under which people can access their pension fund (to encompass times of hardship, for example).
- When resources allow, the Liberal Democrats aspire to introduce a "Citizen's Pension" set at the level of the Pension Credit, and paid to all UK citizens who are long-term residents in the UK.
- The Liberal Democrats would remove tax relief on pensions at the higher rates, so that everyone gets the same tax relief on pension contributions. This would raise money for their planned increase in the personal tax allowance.Source: Liberal Democrat manifesto 2010
|
Whatever the outcome of the election a number of the key proposals already in play remain highly likely to be implemented from 2012. These include the significant obligations to organisations created by the ‘Auto Enrolment’ and NEST (Personal Accounts) rules.
Why? Because irrespective of which party (or parties) win the election, the need for employees to plan for a secure and independent retirement is now more relevant than ever. It is also clear that there has been a realisation by the general public that both the individual and state debt burden needs to be reduced, with more emphasis on savings, in particular for medium to longer term needs.
Many employers already have pension arrangements in place that provide a worthwhile benefit, if not all of the income required for a comfortable retirement, but those employers that offer little or nothing in the way of pension schemes will be forced into making some difficult choices - 2012 is not far away.
For companies that already have arrangements in place, it is important that those arrangements are reviewed within the next 12 to 15 months, to ensure that the current set up complies, or can be tailored to meet, the new rules. It may also be necessary to make amendments to contracts of employment and the required increases in employer contribution levels taken into account when setting budgets and drafting business plans.
Effective communication of existing arrangements, to ensure that employees understand what benefits they have now and how the changes will affect them in the future, is vital. It is worth considering that this communication process could result in HR departments moving dangerously close to giving advice which is regulated, particularly pension and investment advice.
Partnering with an employee benefits adviser that is authorised to provide advice is an invaluable way of working through the legal requirements for pensions, ensuring that the new legislation is implemented without creating unnecessary risk to the employer, whilst at the same time minimising the costs involved.
The Cartlidge Morland's Employee Benefits team can guide your organisation through the turmoil ahead, and may even be able to turn some of the threats into opportunities!
Contact us for a free, no obligation initial consultation.
Demitirus Nurse
Partner - Employee Benefits
Email: employeebenefits@cartlidgemorland.co.uk
Call: 020 7709 5560
Cartlidge Morland is an independent employee benefits consultancy. We provide benefit services to a wide range of partnerships, family companies, PLCs, charities and governmental organisations. We also provide financial advice to private clients, investment management and mortgage broking services
