“A week is a long time in politics”, as former Prime Minister Harold Wilson once said.
If Mr. Wilson said this about a single week in politics, imagine what he would have said about the events of 2023.
Indeed, it has certainly been a tumultuous period for UK politics – from new Prime Ministers to economic volatility.
That said, there has been one policy area that has been thrust into the spotlight time and time again: Pension Policy. In fact, keeping up with such fast-paced change and debate within pension policy can be a bit of a headache for many.
So, as we approach parliament’s summer recess, we at My Pension Expert wanted to offer a breakdown of the UK’s pension policy highlights…
Chancellor Jeremy Hunt’s Call to Arms
In January, Chancellor Jeremy Hunt promised to announce his plan to boost the UK’s economy.
However, as our CEO, Andrew Megson put it “The Chancellor gave us a lecture, not a plan”. Rather than laying out an economic strategy, Mr Hunt argued that the UK’s over 50s, who had taken early retirement at the beginning of, or during, the Covid pandemic should return to work to increase productivity and boost the UK economy.
And this announcement prompted speculation regarding what would be announced at the Spring Budget later in March, and what political tools would be used to encourage people to unretire.
The Spring Budget 2023
As is the case with most Budgets, the build-up to 2023’s Spring Budget was rife with speculation – particularly when it came to pensions. Indeed, with Mr. Hunt’s call for retirees to ‘unretire’, many were unsure what policies would be announced; would over 50s be met with a carrot, or a stick, so to speak?
Despite speculation that The Chancellor would announce an increase in lifetime allowance, many were surprised by what was announced.
It was announced that the lifetime allowance was to be abolished completely. Mr. Hunt also announced that the annual limit for pension savings would increase from £40,000 to £60,000. These policy changes were seen to be an incentive for individuals to stay at work even longer to save more for retirement.
However, the Labour Party have already announced that they will reverse the abolition of the lifetime allowance if they win the next general election, so further change within this policy could be on the horizon.
State Pension Age Review
The state pension age has been a point of contention in recent years, largely due to fears of affordability with an ageing population.
Currently plans state that the state pension age of 66 will rise to 67 in a phased introduction from 2026-2028, and then rise to 68 from 2044-2026. However, in a 2017 government review, it was suggested that the increased state pension age should be brought forward, which would mean that the state pension age would rise to 68 in 2026.
Although, following another state pension review, launched in December 2021 and published in March 2023, it was revealed that any decision on increasing the state pension age would occur in 2026, after the next general election. Such a decision was largely welcomed, however arguably the uncertainty caused by indecision surrounding the state pension age will have been unnerving for many pension savers.
The Pension Dashboard deadline changes again
Earlier this year, it was announced that the government’s pension dashboard was to be ‘reset’ without offering any suggestion of a new deadline. However, the Government finally announced the new deadline for completion of the dashboard in June: 31st October 2026.
The dashboard has the potential to transform Britons engagement with their pensions, as it will enable them to access and assess all their pension information in one place and help to facilitate more informed decisions.
As such, My Pension Expert, along with many colleagues in the pension industry, urges the Government to now be completely transparent about the progress of work surrounding the dashboard. Further, sticking to the new deadline will be absolutely vital in building public confidence in what could be a game-changing tool for the sector.
What’s on the Pension Horizon
There is never a client moment when it comes to the political pension landscape. Indeed, the IFS recently announced a two-year review of pension policy, which hopes to produce some sustainable recommendations to the government.
Further, the next general election, which is predicted to take place in 2024 will likely see further changes to the pension system.
And of course, amidst all the pension policy changes, it is important to know that Britons can always contact advisers, like our team at My Pension Expert, who can break down the political jargon, and help savers to understand what such changes can mean for their retirement strategy and, more importantly, help them to develop a tailored plan to help people achieve the retirement lifestyle they want.
Pension policy can change quickly. But Britons should never feel caught off-guard. Advisers like My Pension Expert are always here to offer advice to help people achieve the retirement they want.