The General Election and pensions policy

Parliament was dissolved on May 30, 2024, with the General Election being held on July 4, 2024. As a result, much of the planned pensions legislation has been lost and it remains to be seen if the various bills will be reprised by the new Government.

The Finance (No.2) Act 2024 survived the election cull and was published on May 24, 2024. Sections of the Act which are relevant to pensions make amendments to the Finance Act 2004 in respect of tax on drawdown pensions from collective money purchase arrangements.

Legislation or policies which were lost, or the future of which is unclear, include:

• The new DB funding regime, with the new Code of Practice being due to be laid before Parliament mid-June before its planned in force date of September 22, 2024.
• Various loose ends remain in legislation related to the abolition of the lifetime allowance, with individuals being left uncertain as to how or when to take or transfer certain benefits.
• The Pensions (Special Rules for End of Life) Bill which included amendments to the definition of terminal illness in both the PPF and FAS so that people with a life expectancy of up to twelve months (instead of the current six months) can receive terminal illness payments.
• The State Pension Age (Compensation) Bill which proposed a specific time period for the Government to set up a compensation scheme for women affected by the increase in State Pension Age.
• The DB and DC initiatives proposed as part of the Mansion House agenda are in limbo and it remains to be seen if they will proceed.

One of the first pensions related election announcements was “triple lock plus” from the Conservatives. This is a proposal to raise pensioners’ tax-free personal allowance in line with the State pension triple lock. This proposal aims to address the problem of pensioners whose sole income is the State pension being drawn into paying income tax due to the freezing of the personal tax allowance. 

It was reported in the general press on June 10, 2024, that the Labour party will not, after all, reintroduce the lifetime allowance if they gain power. This announcement could be welcome news in that it would save an added layer of complexity to legislation.

The Institute for Fiscal Studies has published a report on the five key pensions policy decisions awaiting the next Government. One such decision is the increase in auto-enrolment contributions and the expansion of the regime to the self-employed, lower earners and younger savers. Another is the future level of the State pension.

Our June briefing will look at future pensions policy and the main parties’ manifestos as they become available.