It’s the morning after the night before, and as we all wake up to a new non-coalition Conservative government, we consider the impact of the General Election results on pensions. In our recent blog “The Pensions vote” James Gulliford considered the policies of the main parties. Now that the shape of our government is clearer, we take a look at what the post-election pensions picture could be.
Manifesto Pledges – A reminder
The Conservatives were largely aligned with the other main parties in their promises on pensions. These included a continuation of the triple lock on state pensions, the introduction of the new single tier pension from April 2016 and a reduction of tax relief for the highest earners by further reducing lifetime and annual allowances.
With other issues far higher up the political agenda, pensions was not a major battleground in this election. The pensions pledges made had the general support of the majority of parties and as such are likely to be introduced without much fuss. More interesting to consider, perhaps, is the potential impact on the pensions industry of a new pensions minister and the pledged EU referendum.
A new pensions minister
A solely Conservative government means a new pensions minister, with former pensions minister and Liberal Democrat MP Steve Webb following the nationwide trend and losing his Thornbury and Yale seat to the Conservatives.
But who would want this role? Whatever your views on the laws introduced, as the longest serving pensions minister, Mr Webb bucked the trend and successfully took on one of the most technical jobs in government, wrestling through the raft of new and significant pensions policy introduced during the previous term. Had he remained in this role, it could have been hoped that the new term would have seen a stabilising period for pensions legislation, with the finishing touches being put on existing reforms in areas such as pensions freedoms and auto-enrolment and no other material changes being implemented.
Should Iain Duncan Smith retain his role as Secretary of State for Work and Pensions, he will need to find himself another right hand man (or woman) capable of tackling such a technical subject, and who is not intent on making a name for themselves by using the role as a leg up to a more senior position in the Cabinet. Names in the frame in the pensions press to date include David Gauke (currently Financial Secretary to the Treasury) and Andrea Leadsom (Economic Secretary to the Treasury). We will await the announcement, and subsequent reaction in the pensions industry, with interest.
The referendum on Europe
Another interesting consideration following the election results is the “in-out” EU referendum, which now looks set to happen by 2017. Were the popular vote to lead to our withdrawal from the EU, what would be the impact of this on the pensions landscape?
We suspect that this question will be considered in more depth across the industry as the referendum draws nearer, but some key areas for debate might be:
- How will the concepts of equal pay and equal treatment in the workplace be interpreted without the involvement of the European courts? Will any changes be made by Government or the UK courts?
- What will be the future of cross-border schemes? Will it remain possible/easy for such arrangements to exist?
- How will pension issues be dealt with in the merger or acquisition of European companies by UK entities (or vice versa)?
The next steps
It is likely that, in the short term at least, pension policy will not look very different as a result of this General Election. In our view, that can only be a good thing following the period of significant change and development under the previous Government. It will, however, be interesting to see what direction a new pensions minister will take us in over the coming months, as well as the longer term ramifications of a referendum on Europe. It could be a fascinating few years ahead.