The Labour Party has promised to freeze the state pension age at 66, if it is elected in the upcoming General Election, in its manifesto published today (21 November).
It also stated that the party would review retirement ages for “physically arduous and stressful occupations” and create an independent Pensions Commission, to be modelled on the Low Pay Commission.
Commenting on the potential freeze in state pension age, AJ Bell senior analyst Tom Selby, said: “Make no bones about it – this is a gargantuan promise from Labour with enormous ramifications for those affected, society as a whole and long-term government spending.
“It is therefore incredible that the impact this will have on taxpayers doesn’t appear in the policy costings… If state pension increases are to be permanently shelved, Labour needs to explain who will pay the extra cost in the long term.”
Aegon’ pensions director, Steven Cameron, agreed and highlighted the potential burden on younger people, stating: “There is no ‘fund’ to pay state pensions, with today’s state pensions being ‘paid as you go’ from National Insurance contributions from today’s workers who will face an increasing burden.”
Cameron highlighted that the move “could increase demand for others to be granted more flexibility.”
The manifesto has notably urged for the return to “a single, comprehensive and publicly run pensions dashboard that is fully transparent, including information about costs and charges”.
AJ Bell’s Selby explained that while consumer research has shown a need for a central dashboard, there is no reason to limit the dashboard to this single service, “provided sufficient standards and protections are in place”.
Despite various tax reforms pledged throughout the manifesto, the party have refrained from any radical pensions tax reform – though in relation to the tapered allowance they have promised to “review the tax and pension changes implemented by the Tory Party”.
Emphasising the history of automatic enrolment as a Labour policy, the manifesto has now promised to further “widen and expand access for more low-income and self-employed workers”.
The party committed to maintaining the ‘triple lock’, for both residents and expats, as well as guaranteeing the Winter Fuel Payment, free TV licences and free bus passes as universal benefits.
While Labour have not provided any further specific details on 1950s women affected by state pension age changes, since their commitment in the 2017 General Election to provide “some kind of” compensation, they have promised to legislate to prevent accrued rights to the state pension from being changed.
Aegons’ Cameron explained that this is “a potential vote winner for this group although the detail will be critical with some solutions particularly costly”.
The manifesto has also pledged to legislate on collective defined contribution models and the issues surrounding the Mineworkers’ Pension scheme.
This follows the release of the Liberal Democrat Manifesto yesterday (20 November) which similarly omitted pensions tax reform from its policies.