Labour Party leader Jeremy Corbyn has been described as the “Sheriff of Nottingham” rather than “Robin Hood” in light of the publication of his party’s manifesto.
Some of Labour’s major pension policies include freezing the state pension age at 66 and keeping the triple lock. However, Hargreaves Lansdown head of policy Tom McPhail believes Labour's plans will result in us all having less money to live on in retirement, with the proposal to freeze state pension age at 66 estimated to reduce everyone’s State Pensions by £800 a year if it is to be cost neutral.
“It's not much good retiring earlier if you can't afford to live. This package of measures is likely to ultimately lead to increased pensioner poverty. Jeremy Corbyn may want to apply a Robin Hood tax but the reality is he'd be raiding the pension funds of ordinary people to swell state coffers: he's more Sheriff of Nottingham than Robin Hood.”
Barnett Waddingham senior consultant Malcolm McLean also noted that the cost implications of Labour’s plans are “enormous and as such are almost certainly unrealistic”.
“Independent estimates have suggested that effectively capping the SPA at 66 might cost as much as £300bn, whilst the plan for a flexible retirement age, initially considered in the recent Cridland review, was rejected as being ‘horrendously complicated’ to implement.”
In addition, The People’s Pension director of policy and market engagement Darren Philp said: “Our pensions system is at a crossroads. While it is great to see pensions feature so prominently in the Labour manifesto, we ultimately need a long-term political consensus that supports a system that really delivers for scheme members.
Hymans Robertson partner Chris Noon noted that the manifesto “doesn’t address the severe level of under saving for retirement the UK”. He believes the commitment on triple lock will help but there is no detail on how Labour would tackle the complexity of pension tax relief and incentivise individuals to save more.
“Labour’s commitment to the triple lock is welcomed - it helps low income current and future pensioners who rely mostly on the state pension. They would be worst hit by the removal of the triple lock. It’s also politically astute – it’s likely to be a low cost commitment over the course of the next parliament but will be received well by the electorate.
“The reality is that people will not be able to rely on the state pension alone. Any changes to the state pension must be seen in the context of a looming savings crisis where the state pension will have to increase at a higher rate than earnings. Currently, 75% of people in the UK won’t have enough to retire comfortably; we all need to save more and there needs to be better incentives to achieve this.”
Noon also noted that the manifesto is “very vague on one of the most important areas of pension saving – the workplace pension system”.
“For such a left-leaning manifesto, I’m surprised that they didn’t adopt collective final salary plans – similar to those that operate in the Netherlands. That would have been popular with the Unions and helped the long-term saving crisis.”