The Society of Pension Professionals’ Hugh Nolan on the main parties’ manifesto pledges for pensions.
Pensions remain a political football with short-term opportunism looking more important than consensus, stability or sustainability.
Double lock would mark no change in the short term
The triple lock is the biggest headline grabber, but there is little difference between the parties on this issue in practice. Labour and the Lib Dems would keep it throughout the next parliament (until 2022 at the latest), and the Tories remain committed until 2020 from their previous manifesto.
I prefer the model that rewards people for working longer with an extra cash lump sum if they defer retirement
Purely coincidentally, consumer price inflation reached 2.7 per cent in the same week the Conservatives said they would remove the 2.5 per cent minimum. It is unclear if inflation will be below 2.5 per cent in 2021-22, so the double lock may well be identical to the triple lock for the relevant period.
Parties diverge more on the state pension age
The next big issue is changing the state pension age. The Labour Party appears to have rejected the eminently sensible Cridland recommendations and will halt plans to increase the state pension age beyond 66, at a cost equivalent to increasing state pensions by £800 a year. Yet after allowing for housing costs, pensioners are already better off than working-age households for the first time ever.
Meanwhile, the Conservative Party remains happy to link retirement to longevity and is obviously confident enough of victory not to pretend otherwise.
Think beyond five years
Editorial: Government announcements bringing bad news for pensioners tend to be few and far between – even more so now. With elections imminent, Theresa May has to at least attempt to hide any intention to reduce pensioner benefits, one might think.
In the small print, Labour wants a flexible state pension so those who cannot keep working can draw it earlier. That is nice in theory, but there is a real danger that people may have to take part-time jobs in retirement to make ends meet if they retire early on a lower pension.
I prefer the model that rewards people for working longer with an extra cash lump sum if they defer retirement. Those who cannot keep working until state pension age can be looked after with other benefits, and a universal option would mainly be used by those who will be comfortably off either way.
Hugh Nolan is president of the Society of Pension Professionals and director at consultancy Spence & Partners
