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ACA slams parties’ “damaging” pensions policies

The Association of Consulting Actuaries has lambasted the major parties’ policies for pensions and elderly care claiming they are “threadbare at best and positively damaging at worst”.

Chairman Keith Barton says the most depressing aspect of the parties’ manifestos is their weak commitments to reinvigorate private pension arrangements.

He welcomes the Conservatives’ aspiration to start to restore the effects of the abolition of the dividend tax credit when resources allow, calls for greater annuity flexibility from the Conservatives and Liberal Democrats and an early-access commitment from the Liberal Democrats.  

But he says: “This is just the time when imaginative proposals in the manifestos could set the scene for the period ahead. Instead, the statements in support of private pensions are bland and largely unspecific, allowing wriggle room for these to be low priority in the next Parliament. Even the National Employment Savings Trust, supported in the main by the opposition parties, warrants not one direct mention in any of the three main party manifestos.”

Barton adds that none of the main parties has effectively addressed elderly care costs.  

He says: “There is no near term imaginative strategy to address elderly care costs as part of an overall retirement income policy after years of dancing around this fast growing demographically driven crisis. We have argued for some time that a joined up approach to mapping out the future of state pensions, public sector pensions, private retirement income and elderly care needs to fall under the remit of one Independent Retirement Income Commission.

We have called for this to be established in the new Parliament to avoid a piecemeal approach where issues are not addressed in the round.”    

He has also slammed the Liberal Democrat’s policy to scrap tax relief on pensions for higher rate taxpayers.

Barton says: “We see the Liberal Democrats pledging in their manifesto to grab another £5bn per annum by way of the abolition of higher rate tax relief on pension contributions, a policy that might easily be attractive to a Lib Dem-Labour pact. 

“Aside from the fact that such a policy would impact on millions of middle-earners, again damaging their pensions, it could also lead to immediate tax charges for many of those in defined benefit schemes – hundreds of thousands of private and public sector employees could be affected.”  

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