How the UK election could impact pensions
By Kirsten Hastings, 31 May 17
What looked like a sure thing when UK prime minister Theresa May called the snap election back in mid-April has turned somewhat muddy. Aegon pensions director Steven Cameron has taken a look at what the parties’ manifestos mean for pensions.
With both Labour and the Liberal Democrats committing to the state pension triple lock, the spotlight was on whether the Conservatives would do the same.
However, as widely expected, and grey vote considerations aside, they announced they’d replace it with a double lock from 2020, with the 2.5% underpin removed. This will only lead to less generous increases if both earnings and price inflation fall below 2.5% in coming years.
Many expect inflation to remain above this for the foreseeable future, so in reality, the 2.5% may not bite anytime soon. And it’s that expectation of higher inflation which should be the primary concern for pensioners as it erodes spending power.
The continued link to national average earnings (as well as price inflation) does mean pensioners benefit where a stronger economy leads to greater earnings for the working population. However, this subtlety may not be front of mind as pensioners approach the ballot box.
