There are many things we don’t know about what the snap election might mean for those in or heading for retirement – either because some cards are being kept closely to the politicians’ chests or (more probably!) they are still working out their policies.

But, crystal ball in hand, Mark Soper considers the big three items that the next Government may believe are up for grabs.

Just as it was about to enter the public consciousness, one of the more contentious elements of future pension legislation hit the buffers.

This week the Government announced that it had no Parliamentary time to pass legislation to reduce the tax-free dividend allowance from £5,000 to £2,000 nor reduce the Money Purchase Annual Allowance (a technical rule that restricts making contributions if you have already taken part of your pension pot) from £10,000 pa to £4,000 pa.

These changes to the minutiae of pension regulations appear to be tinkering at the edges, but the Election may bring about much more important changes to the pensions landscape.

State Pension Age 

There have been successive and controversial changes to the State Pension Age in recent years and, for all, the state pension age for men and women will be equalised at 65 in October 2018.

In October 2020 the State Pension Age will then rise to 66, and to 67 in the late 2020s; a further increase to age 68 is expected between 2044 and 2046.

But that may not be soon enough for some. Following last month’s review by John Cridland, new consultation will shortly be underway to consider accelerating the increase in SPA to age 68 from the late 2030s – and perhaps increase the age further to 69 or 70 for the twenty somethings.

With the impending Election there may now be appetite to water down the contents of this review, or (more likely) attempt to shelve it until after the election as raising the pension age for future generations is hardly likely to be a vote winner.

But it might well become an election issue if one party has a manifesto policy which it thinks is a vote winner while other parties neglect to talk about it. Watch this space, as they say…

WASPI

Then there is the whole contentious issue around those women who feel aggrieved about the amount of notice they were given when their SPA was jacked up.

Labour (and the Scottish Nationalists) have been making political hay over this – and may well continue to do so. Will the Conservatives give ground on this? The jury is out…

State pension triple-lock

The triple lock, introduced by the Conservative-Liberal Democrat coalition, is a guarantee that the state pension will rise each year by at least 2.5 per cent, or the rate of inflation, or growth in earnings – whichever is highest.

In its 2015 election manifesto, the Conservative party pledged to extend the triple lock until 2020 and in the 2017 Autumn Statement the government confirmed it will remain in place for the remainder of this parliament.

In his recent review, John Cridland called for the triple lock to be scrapped due to its expense and the former pensions minister Ros Altmann has stated that the triple lock has “outlived its purpose”.

According to Altmann, and many others, the cost of the triple lock on the public finances from 2020 onwards is enormous. That said, if inflation continues to be at or around the 2.5% mark, perhaps the short-term impact may not be so significant.

Labour has pledged to keep the triple lock in place until 2025. In contrast, the Conservatives have have not clarified their position beyond 2020 and are studiously avoiding questions on the subject.

The “grey vote’’ is so massively important to all parties that it will be a brave politician to indicate any suggestion of the removal of the triple lock: expect any manifesto commitments to be suitably ambiguous.

Pension tax relief 

When announcing the U-turn on self employed NICO contributions in his recent Budget, which were intended to fund increases in social care support, Phillip Hammond stated the shortfall will be funded by measures to be announced in the Autumn Budget. The change to self-employed NICO contributions was expected to raise revenues of £2 billion p.a.

Following the U-turn there was widespread media coverage and commentary that the Conservative government (if re-elected) would now focus on pensions tax relief to raise at least this level of missing revenue.

Such a move would not only impact high earners but also the millions of middle earners working in the UK today. There have been some suggestions that the 40 per cent pensions tax relief (enjoyed by those earning at least £43,001 p.a. would be cut, perhaps down to 30 per cent or even to the basic rate level of 20 per cent.

Conclusion

In my view, if Theresa May secures a much larger majority, then the entire pensions landscape will be looked at again and pensions tax relief will be high on the agenda.

While other issues may well be at the forefront at these early stages of the election campaign, don’t be surprised if pensions raises its head – and becomes a battleground between the parties.

There is a simple way to get a firm grip on all your choices: the Premium version of the RetireEasy LifePlan has a simple to use “scenario function”.

First, key in all your “known” parameters – your future income, assets and outgoings together with your desired income during each year of your retirement and save this as your “master template”.

You can then try out and save as many different scenarios as you wish – projecting, for instance, when and how much you might inherit in the future and seeing how this will impact your finances, and how much you could afford to pass down to younger members of the family.

Equally, if you are looking to pass on wealth in the future, you can see what effect gifting members of your family during your lifetime will have on your finances. This can also play a key role in managing future inheritance tax liabilities while ensuring you can live comfortably.

Knowledge is power – so make sure you know exactly what YOUR future might hold!