Following my articles on Income Tax and National Insurance, this article (leading up to the Queen’s Speech on 19 December 2019) looks at what the Conservative Party has pledged regarding Pensions.

This information is from their 64-page Manifesto ‘Get Brexit Done, Unleash Britain’s Potential’.  Given that the Conservative Party have a majority in the House of Commons, this seems to be relevant at this time.

UK-Wide?

Where there are issues that affect UK-wide taxation policy, this is regarded as a ‘national’ matter and announcements can be safely assumed to apply across the whole of the UK.

However, this is one to watch out for and exactly what the implications will be UK-wide:

  • Of course, there is a different Income Tax regime in Scotland and
  • The Northern Ireland Assembly has full legislative powers over personal and workplace pensions. Although, pensions policy and legislation mirror that in Great Britain (though the legislation does not always come at the same time!)

As well as looking at whether announcements and pledge apply UK-wide, we also have to consider whether they apply to all workers.  For example, a letter from Matt Hancock, Secretary of State for Health and Social Care to Simon Stevens, Chief Executive of NHS England outlined changes to pension taxation arrangements for 2019/20 that apply to ‘NHS Clinicians’ in England only.

Current Legislation

As stated above, we have to watch this one.  In general, if there are issues that affect taxation then it will be an Act of Parliament that applies UK-wide.  However, given that pension policy is devolved, any mention of the words ‘Department for Work and Pensions’ tells us that this is Great Britain only.

It is extraordinarily complicated!  I still have problems trying to explain that auto-enrolment / workplace pensions applies UK-wide only as a result of two separate pieces of legislation (the Pensions Act 2008 in Great Britain and the Pensions (No. 2) Act (Northern Ireland) 2008).

The Pledges

I detail the pledges (the formal promises) that the Conservatives made in their 2019 Manifesto:

  • ‘We will reintroduce legislation that protects pension pots from being plundered by reckless bosses, helps savers be better informed with pension dashboards, and creates a new style of pension scheme which is more sustainable for workers and employer’. This seems to mean the re-introduction of the long-awaited Pensions Bill, originally introduced in the Queen’s Speech in October 2019
  • For the State Pension ‘We will keep the triple lock’. This is the unwritten rule that says the State Pension (Basic and New State Pension) will increase by the higher of earnings inflation, price inflation (as measured by September’s CPI), or 2.5%.  In this regard, the proposed Basic and New State Pension values were announced by Dr Thérèse Coffey, Secretary of State for Work and Pensions on 04 November 2019
  • An Income Tax ‘loophole’ exists at the moment where members of Relief at Source (RAS) pension schemes enjoy tax relief at 20% on pension contributions, even though they may not pay tax (because earnings are below £12,500, the value of the Personal Allowance).  However, pension scheme members in Net Pay Arrangement (NPA) schemes in the same situation are not entitled to tax relief on their contributions.  Therefore, the Conservative pledge to ‘conduct a comprehensive review to look at how to fix this issue’ is welcome
  • ‘We will unlock long-term capital in pension funds to invest in and commercialise our scientific discoveries, creating a vibrant science-based economy post-Brexit’. I am not sure that this is an employer consideration 
Budget 2020

I cannot see that there are announcements in the Budget that will affect the above, save to say that the Pensions Bill has been re-introduced and the loophole review is starting / has started.

Of course, around the time of the Budget we can expect confirmation of the Earnings Trigger for auto-enrolment, currently £10,000.

 

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