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Top five pensions priorities for the new Labour government

The dust has now settled on a hard-fought election campaign with the new Labour government entering its first full week in office.

New pensions minister Liz Kendall, who was appointed on 5 July, will have an in-tray brimming with challenges that need to be dealt with.

Here are some of the challenges facing the new pension minister:

Many would like to see more movement on the development of the lifetime pension as part of the promised pension review.

This could help solve the lost pension problem, by allowing people to keep the pension provider of their choice throughout their career.

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Read more: What a Labour government needs to do for pensions and work in the first 100 days

It’s a move that would be likely to stoke competition in the market, boost engagement and enable those who move jobs frequently to take control of their financial future.

Labour’s decision to step back from reintroducing the lifetime allowance was welcomed, but more needs to be done to deliver a simpler system.

Over the years, constant tinkering has led to a complex system that can make it hard to plan long term.

An overarching review needs to look at the system as a whole and make sure people are properly incentivised to save without fear of being tripped up by tax changes further down the line.

Reforms to the Lifetime ISA (LISA) could be particularly useful.

You can save up to £4,000 per year into a LISA and get a 25% government bonus. This acts in a similar way to basic rate tax relief on a pension with any income taken tax free. LISA savings can also be accessed early if needed, subject to a 25% exit penalty. This can be very useful during times when earnings are fluctuating, but the issue is that the 25% penalty not only removes the government bonus but also a slice of your savings too.

Read more: How to make sure you don’t get underpaid when it comes to state pension

Financial services company Hargreaves Lansdown are is calling on government to reduce this penalty to 20% to prevent this from happening. They would also like to see the ages at which you can access a LISA increase from age 40 to 55, as this would cover those who become self-employed later in life.

Labour is keeping the triple lock, but that doesn’t mean the state pension will remain untouched.

We have a burgeoning state pension bill and the government needs to be wary of not placing too much on the shoulders of an already pressurised working population.

With life expectancy slowing and healthy life expectancy hovering around age 63, the government will find its hands tied in terms of future boosts to state pension age.

Ideally state pension needs to be part of any pension review, to put it on a long-term sustainable footing that gives people certainty of what they will get and when.

The question of how to get pension schemes investing in UK businesses has been a major issue in recent years.

It’s a move that has the potential to boost the economy and was included in Rachel Reeves’ first speech as chancellor when she said "driving investment in British businesses has the capacity to deliver greater returns for people’s pensions”.

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