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Point of View Archive

Point of View: The General Election

By Rick Eling, Sanlam

This General Election feels genuinely different. The arguments are happening, not on doorsteps and in set-piece speeches, but on social media. Younger parties like the Greens and UKIP look like real contenders instead of fringe performers. Female party leaders are coming off best in the TV debates. We seem to be heading for a rainbow coalition; May 7th will tell us which colours get left out.

But there’s one colour certain to be in the mix: grey. Voters over 65 served up a 76% turnout in 2010 according to Ipsos-Mori; their Twitter-happy grandchildren in the 18-24 bracket managed only 44%.

So what have the Greens, Labour, the Liberal Democrats, the Conservatives and UKIP offered pensioners, people near retirement, and those in the care system?

Every party stresses that elderly people matter, and each document has a chapter dedicated to later life concerns. UKIP wins the word-count award with a lengthy 1300; Labour comes last with only 216. But what about policy?

The three traditional parties are difficult to tell apart. Labour, the Lib-Dems and the Conservatives all pledge to keep the ‘Triple Lock’. This will see the basic state pension rise by the highest of inflation, earnings, or 2.5% each year- a valuablepromise in zero-inflation Britain. Both the Lib-Dems and the Conservatives claim this policy as their own idea. Labour say they would leave it alone. The ‘big-three’ agree on workplace auto-enrolment and reform to the tax-relief of private pensions.

There is also mainstream support for the pension freedoms introduced on 6 April. No party would take us back to a world dominated by annuities. Labour warns that “…there must be proper guidance for people to avoid mis-selling.”  

UKIP takes this further, calling the current 45 minute Guidance Guarantee “…completely inadequate when potentially life-changing decisions are at stake.” The budget for at-retirement guidance would double under a Farage administration, and they further promise to make cold-calling a criminal offence if it targets your pension pot.

You can’t talk about retirement without touching on residential care. The Greens want to make this free to all on the same basis as the NHS. Labour promises a new 5,000-strong army of home-care workers, and the three other parties all promise to cap residential care home fees. Only UKIP quotes a figure (£35,000) and they go a step further: any income the UK earns from fracking will be earmarked for “looking after older people”.

Mansion Tax appears as a firm policy for both Labour and the Lib-Dems (who call it ‘High Value Property Levy’) on houses worth over £2m. Pre-election talk pegged this figure as low as £1m. The Greens don’t mention mansions, but they do float an annual 2% Wealth Tax on anybody with assets- including houses- valued over £3m.  

Personal tax rates affect anyone paid an income, so pensioners care about this as much as workers. The Personal Allowance for income tax would be £12,500 under both the Lib-Dems and the Conservatives; UKIP tries to trump this at £13,000; Labour doesn’t quote a figure.  

Marginal income tax rates wouldn’t change much under any party: Labour would bring back the 10% and 50% rates; UKIP would introduce a 30% intermediate rate; and a Conservative headline is to raise the 40% threshold to £50,000, ending years of so-called ‘fiscal-drag’.

Only the Greens opt-out of the income tax bidding war. Their tax proposals are by far the most radical of any party likely to have at least one MP in Westminster. They will scrap the personal allowance altogether and give every UK citizen a non-means-tested income. Their pension plans build on this: everyone in the UK, regardless of contribution record, would get £180 a week as a Citizens’ Pension under the Greens.

But the Green’s whole attitude to tax is from a different place to the other four parties. Even traditionally redistributive Labour commits to keeping your money in your pocket to some extent, but the Greens take aim directly at that idea: “Tax is not a punishment, and it is not stealing by the state….every percentage drop in taxation represents an assault on the ties that bind us together.”  

It’s no surprise that the most radical policies are found in the newcomers’ manifestos. Both the Greens and UKIP have won support by positioning themselves as an antidote to the big three. Their leaders have attacked a “cosy Westminster consensus” and accused Labour, the Lib-Dems and the Conservatives of being interchangeable. There is little in the manifestos aimed at older people to challenge that view.  

Fringe parties always enjoy the luxury of talking a good game. They usually know that they won’t be forming a government. While nobody expects anyone but Cameron or Miliband to be Prime Minister, the make-up of any coalition cabinet is far from certain. If the Greens or UKIP succeed in winning sections of the grey-vote then we may see some of these pledges come in from the fringe.  

If you are interested in discussing retirement planning or your financial planning arrangements, please do not hesitate to get in touch. We'd love to hear from you.  Email letstalk@sanlam.co.uk.

Date issued: 05.05.15

Please remember any views or facts expressed above are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness. Any expressions of opinion are subject to change without notice. None of the information should be regarded as advice. Past performance is not a reliable indicator of future results. Investing involves risk and the value of investments and the income from them may fall as well as rise and is not guaranteed. Investors may not get back the original amount invested. Any tax treatment is dependant upon individual client circumstances and may be subject to change.

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Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.