Mortgage rates, pensions policy and investments could all be affected by the upcoming general election.
Last night (May 21), prime minister Rishi Sunak called a general election for July 4, but what does this mean for people’s finances?
All parties will need to set out their personal finance priorities which could include changes to pensions rules and may see some promised long-awaited reforms such as changes to auto-enrolment.
The UK could also see impacts to mortgage rates and investments as well as simplification of the Isa landscape.
FT Adviser looks at what changes could come as a result of the election.
Pensions
The next government will have some big decisions to make regarding pensions policy, according to Tom Selby, director of public policy at AJ Bell.
Both the Conservatives and Labour have committed to the pensions triple lock.
This ensures the state pension rises by the highest of average earnings growth, inflation or 2.5 per cent.
Selby said: “While neither party is likely to talk about it in their manifesto, it is possible planned state pension age increases will also come into focus for the next administration.
“The current state pension age is 66, with plans in place to raise this to 67 by 2028 and 68 by 2046. However, there have been calls from various quarters to accelerate that timetable in order to save the Treasury money.”
Another policy up for contention is the lifetime allowance. This has been scrapped by the Conservatives this year but Labour has previously stated it will reintroduce it.
“This would be a retrograde step, adding unwelcome complexity to an already complex system,” Selby said.
“It would also run directly counter to wider efforts to boost investing, as any lifetime allowance tax charge would punish those who enjoy strong investment growth.
“We’d urge all parties to focus on keeping pensions as simple as possible and avoid turning pension tax into a political football. By their very nature pensions are a tool for long-term planning and the public need to be confident that governments won’t move the goalposts every five minutes.”
The pensions industry has also been patiently waiting for reform to be made to auto-enrolment.
There have been recommendations to lower the minimum age for auto-enrolment from 22 to 18 and lose the lower qualifying earnings band, but this has not been enacted on - and the looming dissolution of Parliament means the amount of legislation which wil pass until later this year is now severely limited.
Tim Middleton, director of policy and external affairs at the Pensions Management Institute, said: “The Pensions (Extension of Automatic Enrolment) Act 2023 gained Royal Assent in September last year, but as yet we are still awaiting the regulations needed to implement the changes.
“It would be extremely frustrating for these overdue reforms to be delayed any longer. When the coalition government came to power in 2010, one of their first reforms was to the drawdown rules.
