Political uncertainty has continued to surround Westminster in the weeks after the 8 June general election. But at least we can say that this period of political volatility has been met by a period of relative pensions stability.
The Conservative Party has formed a government, following a ‘supply and confidence’ agreement with Northern Ireland’s Democratic Unionist Party. And on 21 June, the Queen’s Speech outlined the parliamentary priorities for the coming two years. In normal times, there would be a Queen’s Speech every year, but it has been decided to let this term run for two years to give time for the many Brexit-related issues to be addressed. The final Queen’s Speech contained 27 ‘bills’ – that is 27 new areas of intended legislation for parliamentary debate. Eight of these specifically relate to Brexit.
Pensions and retirement issues are noticeable by their absence from this final list of 27 bills. The Conservatives’ general election manifesto included pledges to scrap the state pension triple lock; to means-test the winter fuel allowance; and to overhaul Britain’s approach to social care. None of these more contentious issues made the final cut.
This does not mean, however, that we will see no changes in the pensions landscape in this parliament.
In July the government confirmed plans to accelerate the state pension age for those born after 5 April 1970. For this population, the rise in the state pension age from 67 to 68 will take place between 2037 and 2039, rather than from 2044 as was originally proposed. You can find more information about your state pension age here. (Please note the changes announced in July have not yet been adopted by this official calculator as they have not yet been approved by Parliament. We assume the calculator will be updated as and when the July 2017 changes are appoved.)
In 2017, the government is also sponsoring a review of pensions automatic enrolment. This system has brought millions of new savers into workplace pensions since 2012, but the rules are being reviewed in 2017. This review includes recommendations for changes around coverage, engagement and contributions due to be tabled by the end of the year. And the annual cycle of government Budget Days will continue – raising the possibility of tax changes impacting pensions. The next Budget Day has been scheduled for November 2017, at a date to be confirmed.
The government has also confirmed that the intended reduction of the money purchase annual allowance – to £4,000 if you withdraw money from your pension – will still come into effect (retrospectively) from April 2017. This only affects people who have withdrawn money from their pension savings. We wrote about this in our recent article on tax changes.
The short-term political and economic landscape may be uncertain, but our long-term need to manage our retirement remains unchanged. At times of volatility it may help to remain focused on the long game.
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