As we know, the Labour party won the 2024 general election, with Sir Keir Starmer appointed as the new prime minister for the United Kingdom.
Ahead of the vote, Labour set out the steps the party proposed to take with regards to UK pensions.
- The party committed to retaining the triple lock for the state pension and announced its intention to review the pensions landscape and adopt reforms to ensure that the system of state, private and workplace pensions provide a basis for security in retirement. This includes reviewing what action is required to improve pension outcomes, increasing investment in UK markets and taking advantage of consolidation and scale, with the aim of delivering better returns for UK savers as well as more productive investment.
- Green finance is also high on the party’s agenda, with a requirement for pension funds to develop and implement transition plans that align with the Paris Agreement. Pension funds, banks, insurers and FTSE 100 companies, along with other UK-regulated financial institutions, would be mandated under the plans to develop credible transition plans that meet the Paris Agreement’s 1.5°C goal.
Stuart Price, partner and actuary at Quantum Advisory, said:
“Pensions are a key policy area for political parties as most voters will receive the state pension at some point and employees are contributing to workplace pensions throughout their professional life.
“It is not surprising to see Labour retain its commitment to the triple lock as this is a particularly popular policy especially among voters over the age of 40. However, it was interesting to see that alongside this policy, proposals to reform pension schemes were also highlighted.
“Reforms to pension systems are good political strategies to enable growth and economic prosperity but no real detail was provided as to what would be done. What we really need is a full review of our pension system as it is clear the younger generation is not saving enough, which will lead to huge problems in the longer term.
“Changes to the tax relief system for pension saving such as a flat rate 30% for everyone will help the lower paid, which is the demographic that needs the most help when it comes to pension saving.
“The big game changer, in my opinion, is a legislative increase into the minimum contributions required under auto-enrolment legislation from say, an 8% total to at least 12% over a period of time. It will be interesting to see if any ‘big pension saving changes’ happen over the next few years.”