Labour's Plans For Your Pensions - King's Speech Special
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Published 2024-08-01
This was because, surprisingly, there was a new Pensions Scheme Bill announced in the speech.
I’ve now gone through the briefing notes that accompany the King’s Speech and what’s been said since by Labour ministers. So, let’s look at how Labour’s plans for pensions might impact you.
Before we start, I must say that many of the measures that are to be included in the Pension Schemes Bill were raised by the previous Conservative government. You can read more on their thought process by reading Jeremy Hunt’s Mansion House Reforms.
Labour have taken these reforms on and say their will go further.
Within the King’s Speech background briefing notes, the Pensions Scheme Bill is number three on the list of new bills discussed behind just the Budget Responsibility Bill and the National Wealth Bill.
There were over 35 bills announced in the King’s Speech so should we read into this that the Pensions Scheme Bill is an important one for Labour?
The overall aim of the bill is apparently “to increase the amount available for pension savers and could help an average earner, who saves over their lifetime in a defined contribution scheme, to have over £11,000 more in their pension pots with which to secure their retirement income.”
There is already plenty to unpack from this statement and lots wrong with it.
Firstly, no government can control what returns pension savers will make. Returns will be down to two things, the amount saved into a pension and the performance of the underlying investments.
Governments don’t control where investment fund managers invest…. yet!
It’s really misleading to communicate that government meddling is going to be able to produce a larger retirement pot and specially to put a figure on it.
If you are going to mislead the public, you would have thought they would have used a higher figure than £11,000.
One of the first points of the briefing notes confirming Labour’s plans for pensions, states that the bill will consolidate individual deferred small pension pots. So, this means pensions that are no longer being paid into. Most likely a pension you have from a previous employer.
Whilst it’s generally a good thing to consolidate pension pots to make the administration easier, lower costs and be better able to manage your overall investment strategy, caution is needed here.
Many older pension schemes still have valuable benefits available to members which would be lost if the pension was transferred.
Next the briefing notes mention a ‘Value for Money Framework’ where they aim to force pension providers to demonstrate they are providing value for money.
I would argue, if you look for it the market for pensions has already produced a pretty good value for money proposition.
A further worrying statement in the briefing notes was around pension schemes having to offer a “retirement income solution”.
This sounds like further control from the government and pension providers on how retirees can take their money out of pensions.
We have recently had an attempt to do something similar with pension saving funds, known as lifestyle funds.
These types of lifestyle funds fell off a cliff during the days following Liz Truss’ famous ‘mini-budget’ wrecking lots of people’s retirement.
Defined Benefit pension schemes were also mentioned in the briefing notes and again it was around consolidating schemes.
Good for the unfunded poorly run schemes, not so good for the well-funded, well-run schemes that have to accommodate the others.
The big theme for Labour’s plan for pensions is to ensure greater investment into the UK economy. They want a slice of the pension market to fund infrastructure, the green agenda and investment into private companies.
On the plus side there was no mention in the King’s Speech or the briefing notes about changes to the pension Annual Allowance, Lifetime Allowance or tax relief.
What I suggest you should be doing now is carrying out a review of all your pensions with a view to potentially consolidating them into a solution that you choose before it is chosen for you.
Before you transfer any pension remember to check for protected benefits.
The biggest decision you need to make with any pension you have is the underlying investment strategy you take.
For the best results over the longer term an investment into global equity will be the most prudent but look at how your pension investments fit into your overall wealth investment strategy.
Overall, it is good to be diversified across assets from a protection point of view.
It feels like the government want more control over your money, so you might want to consider things you can do to take away this control and ensure you are in charge.
#laboursplansforpensions #pensions #labourparty
All Comments (21)
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The Pension does not belong to the Government, it belongs to the person who contributes to it.
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In the 1990s I sold pensions on the strenght that the tax free lump sum would pay off most if not all of the mortgage and leave the investor with a pension for life. Most were over a 40 year term plus, I was not alone.
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My retirement strategy is get out of the U.K. as soon as you can
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Allowing career politicians with a history of scandal, failure & who pay no price for being wrong to meddle with your pensions. What could go wrong 🤤
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The government's plans can be summed up briefly as 'Take it and spend it'.
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If government introduces means testing of the state pension, apart from being tantamount to theft, this will massively discourage people from saving into a personal pension.
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Who on earth voted for these dangerous clowns? I certainly didn't - and worse - neither did most of the voters!
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I’m quite happy for the government to look into ex government employees including MP’s who retire at 55 on a final salary scheme. Why can’t they dip into this pot and let all them live on £12570 per annum like most pensioners. And, make these employees work until they’re 66 or 67 like the rest of us
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They are coming for pensioners.
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I've worked all my life and have the full 35 years of qualifying NI payments, for a full state pension. However, after building a healthy private pension pot. I now have 7 years before I retire and It looks like I potentially won't get any state pension, if means testing and other limiting policies are introduced. This effectively means I'll lose £12K+ a year, of my pension income. I probably won't be entitled to any other benefits or tax credits either and I'll pay tax on that pension. All because i thought I was doing the right thing. Therefore, from my point of view, you're better off spending more of your money now, rather than trying to have a comfortable life later, which you're penalised for. Have less, get more.
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i'm sick and tired of Politicians interfering with our Pensions.
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Really concerned they will bring in means testing and say anyone with a private pension is 'too wealthy' for the state pension, even if they have paid in all the require NI over decades. There are too many freeloaders now.
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I paid into my Pension. So I want it back.
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It’s our money we have paid in My husband passed away 3 years ago he paid in from the age of 17 until he dies at 60. Where has all his money gone. My family should have lest had some of his money. Where has it all gone discudting !!!!
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I haven't forgotten how much Gordon Brown cost me when he ignored warnings about Equitable Life. I don't trust Starmer an inch further than I can throw him. Labour's mantra should be "You will be severely punished for being financially responsible".
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😅I'm retired,and recently received my new tax code,lowering my tax code,so my pension rise was halved,my wife literally retired in July and received her tax bill before shes even received her pension which she wont get until September. 92 years of working jointly,that's our thanks.
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The government need to take their grubby mits of our pensions
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Liebour is ok until they run out of other people’s money.
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I’m an ex miner they’ve already taken billions out of our pension over the yrs and keep doing so to this day
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Great video, I’m 40. retired a while at 39. I have 35% of my capital investments in an IRA. 25% in index funds, and the balance spread across other investments acts. In cumulative of over $5m. I receive income from my rental properties too. Zero debt and all is going accordingly.
