Pensions to take central role in General Election – AJ Bell

As the UK’s two main political parties contend for support from the 10 million savers introduced to pension saving through automatic enrolment, pensions are likely to take a central role in the forthcoming General Election campaign, according to AJ Bell.

The UK investment platform, which has been analysing how a General Election could affect people’s personal finances, has suggested there has never been a larger section of the electorate with a vested interest in the pension policies of the prospective political leaders.

AJ Bell has said the most politically toxic area of pension policy centres around plans to increase the state pension age – under accelerated plans announced by the Conservatives in 2017, the state pension age will rise to 67 by 2028 and 68 by 2039 – a full 7 years earlier than had previously been proposed.

“This was deemed necessary to address the rising cost of state pension provision, with improvements in life expectancy expected to increase state pension spending by 1% of GDP, from 5.2% to 6.2%, over the next two decades or so,” AJ Bell senior analyst, Tom Selby commented.

“The Government estimates the accelerated increase in the state pension age will save £74bn to 2045/46 compared to existing plans.

“However, recent data points to a significant slowdown in life expectancy improvements since 2010, which unfortunately for the Tories coincides with the introduction of austerity policies across the country.

“The combination of a rising state pension age, at the same time as life expectancy improvements have ground to a halt, is political dynamite which even a seemingly dysfunctional Labour Party is likely to seize.”

Labour, in its 2017 manifesto, pledged to halt proposed increases beyond the age of 66 and commission a review of the state pension age – and AJ Bell noted the party wants the state pension age to reflect ‘the contributions made by people, the wide variations in life expectancy, and the arduous conditions of some work.’

Selby continued: “It remains unclear how this will work in practice, and in particular what would be deemed ‘arduous’ in the context of state pension policy.

“Given Boris Johnson has already shown his willingness to depart from the policies his party was elected on, it would be no surprise to see him attempt to neutralise this threat in the Conservative manifesto.”

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