What Labor and the Conservatives offer pensioners in their manifestos

Last week, a flurry of manifestos were released outlining what different parties would do if they won the election. State pensions have been a key area, with pledges of support for the triple lock coming early in the campaign. The Conservatives then went further with their triple lock plus. Under the pledge, retirees’ personal allowance will increase each year, so someone who relies on the new full state pension (currently around £11,500 a year) will not pay tax on that pension.

This is a strong response to the problem of freezing tax thresholds which attracts more retirees to taxpayer territory. It will be well received by retirees whose budgets have been reduced by the cost of living crisis. However, others will question whether a public pension system, already under pressure, will be able to bear this additional cost.

But what else do the parties offer retirees? The Conservatives went big on their platform by promising to maintain all current retiree benefits. These include free bus passes, winter fuel payments and TV licenses for those who qualify.

Watch: What Labor’s ‘Lifetime Allowance U-turn’ means for your pension

They also unveiled the tax guarantee on pensions. As part of this, the Conservatives have promised not to introduce new taxes on pensions so that tax-free cash and tax breaks on contributions remain intact. This will provide much-needed certainty for people looking to get the most out of their pension contributions.

The Liberal Democrats also highlighted their support for the triple lock and outlined plans to close the gender pension gap and improve state pension helplines so people can get their questions answered faster.

On the other hand, the Labor program is more discreet. The promise to maintain the state’s pension triple lock was there, but there was no mention of their widely reported decision not to reintroduce the lifetime allowance. Likewise, no promises have been made about changes to tax breaks or pension benefits.

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So what could this mean? Rumors abound ahead of any budget event that the government may be tempted to cut benefits or tax breaks on pension contributions. They provide fertile ground for any government in need of liquidity. For example, we have seen major changes in the annual allocation in recent years. As recently as 2010-11 it stood at a whopping £255,000 before being reduced to £40,000 and then rebounding to £60,000.

Watch: What’s next for the state pension? Sunak unveils ‘Triple Lock Plus’

Rumors have also increased that a Labor government could cut pension tax breaks. The origin of these rumors appears to have been comments made several years ago by Rachel Reeves in favor of a flat rate of around 33%. Such a move would bring a welcome increase to contributions for basic rate taxpayers, but a reduction for those on a higher, additional rate.

However, Labor sources have since said that such a move does not constitute current Labor policy, although there is nothing to stop Labor, or indeed any other party, tinkering with it in the future if it wins the elections.

Labor has promised to carry out a thorough review of the pensions landscape to ensure it is working as well as possible and issues such as benefits and tax breaks could be a factor in this. The key would be for any review to be carried out in depth, taking a holistic view of the entire system, rather than constantly tinkering around the edges.

The system must provide long-term certainty to help people plan for their retirement with confidence without fear of being blocked by complex legislation. Such a review is expected to take place regardless of who wins next month.

In the meantime, people should work with the system as it currently fully utilizes all the retirement benefits available to them to build their financial resilience in retirement.

Watch: Sir Keir Starmer and Rachel Reeves asked about their election plans

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