Discussing the possibility of earlier state pension access, which Labour has backed to an extent through its vow to maintain to the 2020 SPA of 66, and launch a review into the matter, Mr Newman says: “Earlier access for certain groups who may have shortened life expectancy would seem fair to many people, but it raises the questions of how this could be managed while keeping administration costs low.”
Pensions tax relief
The pensions industry has harboured suspicions that an overhaul of tax reliefs is around the corner, but the manifestos say surprisingly little on the subject. The Liberal Democrats are the only main party to have put forward plans to alter the system. The party’s manifesto pledges to review the case for introducing a single rate of tax relief “set more generously than the current 20 per cent basic rate relief”.
Jardine Finan’s Mr Finan sees the prospect of a flat rate as “a vote winner without being a cost to the government”.
“The flat rate would be very popular. If it were to be done, it would likely be about 25 per cent,” he adds.
Conversely, Close Brothers’ Mr Newman says: “A single rate above 20 per cent may encourage basic-rate taxpayers to consider further contributions to pensions, but there is the danger that if higher earners wanted to maintain relief on a marginal rate basis they would make pension contributions via a salary sacrifice basis.
“To stop this happening would mean ending salary sacrifice for pensions, and it raises the question of whether it would be easy to distinguish these from what may be termed as ‘normal’ employer contributions. If there is then a need to revisit the basis of employer contributions tax status, this could end up undermining the good work of auto-enrolment.”
The Conservatives are also planning a tightening of rules for pension schemes, promising a crackdown on those who leave schemes underfunded.
Income tax
Personal taxation pledges from the Conservatives have a familiar ring to them. The party has reasserted that it will increase the personal allowance to £12,500 and keep the higher rate at £50,000 by 2020, as well as ruling out a rise in VAT. But there has been little detail on other measures now the party has abandoned the Cameron-era pledge not to raise taxes. Labour has vowed to renew its pledge “not to extend VAT to food, children’s clothes, books and newspapers and public transport fares”.
On income tax, the Liberal Democrats have proposed a 1p rise on basic, higher and additional income tax rates to raise £6bn for the NHS and social care services, which could help ease the burgeoning issues in those areas.
