Election manifestos from the Conservative and Labour parties include several points relevant to retirement – but they also neglect to address several important factors.

Jeremy Corbyn has pledged to keep the state pension triple-lock policy for the entire Parliament. Theresa May is planning to replace it with a double lock – linking the payment to the highest of earnings and prices – from 2020.

Labour has pledged to stop planned increases in the state pension age beyond age 66. It wants to look at alternatives which take into account variations in life expectancy based on things like type of work and where someone lives.

The party would have to tread carefully to avoid re-introducing the crippling complexity of means testing to the state pension.

The danger is that Labour makes the perfect the enemy of the good by trying to create a fair regime and, in the process, layering on huge administrative cost and making it more difficult to navigate.

Missing from the manifestos

It is not just what the major parties say that matters. Sometimes what they don’t say is equally important.

The Conservative manifesto, for example, is conspicuously silent on its plans to increase the state pension age.

We can probably take from this that, if Mrs May does win power; she will proceed with plans set in train ahead of the election.

That could mean those in their 20s today have to wait until they’re 70 to receive anything from the state – a potentially daunting prospect which re-emphasises the importance of taking control of your own financial future.

Question mark on tax benefit

On pension tax relief, both Labour and the Conservatives say nothing at all. This is particularly surprising given Labour’s commitment to tax those earning over £80,000 at 45% and introduce a new 50% tax band on earnings above £123,000.

Because pension tax relief is granted at your marginal rate of income tax, this policy – which is clearly targeted at the ‘rich’ – will lead to more retirement tax perks going to those with higher incomes. It seems highly unlikely that Labour’s leader, an outspoken Socialist, intends for this to be the case.

The Conservatives have at least committed to a review aimed at simplifying the tax system. Hopefully this would strip away some of the horrible rules retirement savers face, particularly around the Lifetime Allowance.

However, it must not be used as an excuse to cut back savings incentives, and any reform should have a clear aim of encouraging more people to put money away for their retirement.

Tom Selby,

Senior Analyst, AJ Bell

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