Labour pensions policy: Industry needs stability from Keir Starmer

18 Jul 2024

First seen on Money Marketing

The political landscape has shifted and a new government is in charge. Before Keir Starmer walked through the famous Downing Street door as prime minister on 5 July, he stood at the lectern outside and declared, “Our work is urgent and we begin it today.”

Labour will inevitably have a long list of planned changes to work through, and after 14 years on the opposition benches, Keir Starmer has wasted no time in appointing his cabinet.

'Stability and moderation' are the pledges that Keir Starmer made for the UK under the new Labour governement. For those of us in the pensions industry, it's that stability that we hope to see delivered.

Pensions Dashboards must be a priority under Labour

Irrespective of which party won the election, top of the our list is a commitment to the pensions dashboards.

There has been a significant amount of investment and, given the implementation timeline, it is essential the programme retains the backing of this new government. The Pensions Dashboards programme has the potential to support millions of people to make better financial decisions, plan for their retirement and find their lost pension funds.There’s a lot riding on it and so it’s vital this work happens and soon.

Pension providers and schemes are required to connect to government digital architecture by 31 October 2026, but they need to “have regard for guidance”, which, for some schemes, means connecting by 30 April 2025 – which is in the not too distant future. There’s still plenty that needs to be in place before then. We need to keep the momentum going and for that we need a clear commitment to ensure the whole industry can join together to make sure everything works as it should.

The timetable needs to remain achievable. While Labour said the UK “voted decisively for change” we hope there isn’t too much change on this front.

Work and pensions secretary Liz Kendall will have an overflowing in-tray to contend with in the Department for Work and Pensions (DWP). Kendall said Labour is determined to provide “security in retirement”. She’ll be supported by former pensions minister Stephen Timms, who has been appointed as minister of state in the DWP, alongside Alison McGovern.

Meanwhile, newly appointed pensions minister Emma Reynolds will have one foot in the DWP camp and one in the Treasury. Prior to the election, Labour proposed a review of the pensions landscape, so we can only hope dashboards will be near the top of the agenda.

What is Labour's stance on LTA reform & the UK ISA?

Another area which could benefit from a period of stability is around the lifetime allowance (LTA) reform. Labour had planned to reintroduce the LTA but then reconsidered. The LTA abolishment has been a significant technical challenge to implement within the short timescales.

There was a great deal of uncertainty right up to when the change of rules came into force. And there is still further work required to satisfy all the clarifications introduced post-6 April. Once sorted, we need stability to allow the rules to bed in.

We need to depoliticise regulatory change. Where change is required, it should be carefully considered, fully tested and rolled out effectively. An independent long-term savings commission is what’s called for.

Talking of savings, we are keen for Labour to clarify whether it intends to progress with the UK Isa, which former chancellor Jeremy Hunt announced in the 2024 Spring Budget. Both the Conservatives and Labour decided not to give any mention of the proposed new £5,000 allowance in their manifestos. The product was billed as a way for savers to invest in the UK – but will it get off the ground?

Labour is keen to promote the notion of investing in “homegrown businesses” and Reeves has suggested she will stick to her predecessor’s plan to encourage pension schemes to invest in UK equities. Labour has also said it supports Isa simplification. Would it view adding a new one into the mix as simple? If it does get the go ahead, we will need time to implement before it’s launched to the market.

I’m a great believer regulatory change is a power for good but, like all power, it needs to be carefully handled. I, for one, am hoping it will be used gradually to ensure we have more stability when making significant changes that impact clients.

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