As Boris Johnson’s Conservative Party secured an impressive majority in the UK general election, the Pensions and Lifetime Savings Association (PLSA) has challenged the new government to ensure that the nation achieves a better income in retirement.
The PLSA called on the new government to urgently follow through on its manifesto pledges for pensions, highlighting that it should promote better retirement outcomes for millions of UK savers by:
- carrying out the promise of the previous government to quickly increase the band of salary on which savings are made;
- widening the scope of automatic enrolment so it includes more people on low earnings with multiple jobs;
- increasing total contributions to 12% by 2030 with half from the employer
Nigel Peaple, director of policy and research at the PLSA, said: “Ensuring adequate contributions, fostering effective engagement and allowing well-run schemes to operate at appropriate scale provides the blueprint for making the greatest difference to the greatest number of people. We must get on with improving the system.”
Helen Morrissey, pension specialist at Royal London, made some similar points.
“While Brexit will undoubtedly be top of his to-do list, we urge the prime minister to make good on his manifesto promises to help low paid workers in net pay arrangements as well as addressing the long running saga of NHS doctors affected by the tapered annual allowance,” she said.
Morrisey called for the pensions bill – “put into mothballs” after the election was announced – to be dusted off to allow the industry to make progress on issues such as the Pensions Dashboard.
Susan McIlvogue, partner at Hymans Robertson, said there should be few surprises for pension schemes and trustees following the election as the Conservatives had pledged to continue their commitment to the pensions bill, bringing with it stronger powers for The Pensions Regulator (TPR) to hold all schemes to account.
“[S]chemes should act now to avoid being caught on the back foot by the revitalised regulator on the horizon,” she said.
Brexit pathway clearer
Commentators said that for 2020, the election result reduces the chances of second referendums on European Union membership and Scottish independence.
Many expect sterling to soar, some mentioned to $1.40, with billions of pent up business investment to be unleashed to boost the British economy.
Several commentators said the strong Conservative win provided some near-term economic clarity as the UK will finally leave the EU and public sector net investment will increase.
Dennis Shen, analyst at ratings agency Scope, said: ”The result gives the Conservative government its opportunity to at last deliver Brexit after multiple delays and on terms similar to those that Prime Minister Boris Johnson agreed with the EU on 17 October.”
Hetal Mehta, senior European economist at Legal & General Investment Management, said significant questions still remain as to the next stages of the Brexit process, however, not least the timeline for agreement on a ‘future relationship’ with the UK’s European partners.
“Indeed, given the relatively brief amount of time left for these talks, we expect the new UK government to request an extension to the transition period beyond the end of 2020,” she said.
James Clunie, manager of the Jupiter Absolute Return Fund, said the election was a critical one for investors. This was for reasons including that the Labour policies were ”strongly anti-investor: think nationalisation, effective expropriation of assets, windfall taxes and higher corporation tax.”
He said that investors, including pension funds, individuals and charitable endowments, would have suffered, and that UK equities and sterling had been depressed going into the election ”out of fear of these policies becoming a reality”.