By Steven Cameron

THE UK General Election on July 4 is fast approaching, with pensions and pensioners already playing a key part in the major Westminster parties’ electoral campaigns.

For those of us in Scotland, pensions policy is not a devolved issue, meaning the UK Government is responsible for the legislation governing private pensions and the state pension in Scotland, England, Northern Ireland and Wales. With that in mind, where do the UK Conservatives and UK Labour parties stand on some of pensions’ biggest issues?

When the triple lock came into effect in the 2011/12 tax year, it was designed to make sure state pensioners benefited from increases of at least inflation, with higher jumps during times of above-inflation earnings growth and a minimum underpin of 2.5%. Over the last 12 years, it’s achieved that goal, although the UK state pension’s generosity still lags behind that of many other developed countries.

Most recently, a combination of the pandemic and war in Ukraine has contributed to the highest UK inflation rates for over 30 years, alongside highly volatile earnings growth. As a result, the past two years have seen the two highest increases to the state pension since the triple lock’s introduction. Bearing in mind that today’s state pensions are paid for by today’s workers, this has raised questions over just how financially sustainable the current system is.

The good news for is that both parties have committed to keeping the triple lock for the next five years. In addition, the Conservatives have committed to what they’re calling the “triple lock plus”, should they stay in government.

This means that on top of the current triple lock, they’d also offer additional protection to avoid someone on the full new state pension (currently £11,540 per year) having to pay income tax on this entitlement.

Essentially, those above state pension age would get a higher personal allowance, increased in line with the triple lock formula, so that the full state pension always remains below the income tax threshold – currently frozen at £12,570 until April 2028.

This may appeal to older voters, but does create differences from working-age generations, which some may not view as fair. Then again, state pensioners don’t pay national insurance, so haven’t benefited from previous cuts in NI or the further 2p cut pledged by the Conservatives.

Another consideration is how increases in the level of the state pension could affect the age at which you can access it. The higher future increases to the state pension are, the greater the cost pressure could be to increase the state pension age further and faster.

The state pension age currently sits at 66, but this is due to reach 67 between 2026 and 2028, before increasing again to 68 between 2044 and 2046. There is already a review of the increase to 68 scheduled for the middle of the next Parliament, during which a decision will be made on whether the increase needs to happen sooner than planned.

Pension schemes across the UK hold many billions of pounds in funds. These are invested in the interest of scheme members – and in defined contribution pensions, all other things being equal, higher investment returns mean higher pensions.

The Conservatives have been seeking to get schemes to invest more in the UK and in growth companies. The Labour manifesto confirms that if in power, it would continue this drive, designed to boost both member outcomes and UK economic growth. Both parties are also keen that pension schemes help the UK achieve net-zero targets.

So, whoever is in power next, you may want to take an interest in where your pension funds are being invested.

Automatic enrolment is rightly celebrated as one of the greatest pension successes of recent years, with over 11 million more employees saving into workplace schemes and benefiting from valuable employer contributions since its introduction. However, it’s also widely acknowledged that the current minimum contribution rates won’t provide enough income, on top of the state pension, to give many a life of luxury in retirement. In fact, for most it will be woefully inadequate, so it really is time for an update.

Unfortunately, the first such reform, which would have seen the auto-enrolment age lowered to 18 from 22, and the minimum 8% contribution calculated on all of your salary rather than just annual wages earned over £6,240, has failed to be implemented despite winning cross-party support back in 2017.

Before the election was called, the Conservatives confirmed these changes would be delayed until the “mid to later part of this decade” and there were no claims to the contrary in their manifesto. Meanwhile, Labour hasn’t set any timescales for these developments. Enhancing auto-enrolment will affect millions of us across Scotland and beyond, but as things currently stand, it’s not at all clear what any future government’s plans are.

While you may not have heard of them, pensions dashboards are an exciting, new development currently being worked on – which could benefit every pension saver in the UK. These will be online platforms through which you can locate and keep track of your various pension pots, all in one place.

Pension providers and schemes up and down the UK will be required to connect to the government’s underlying “digital ecosystem”, meaning that if you’ve ever lost track of a pension, you’ll be able to find it and take control. Helpfully, you’ll also be able to use dashboards to assess if you’re saving enough for the retirement you hope for.

They’re not here just yet, but I am hopeful that you’ll be able to access dashboards from the second half of 2026. And if there is a change of government this summer, I hope it won’t affect these timelines.

Last year, the Conservative government surprised many people by scrapping the pensions lifetime allowance – the limit on how much you can hold tax efficiently in a pension. It had stood at £1,073,100 and unless you had special protection, any funds above that faced a tax charge.

In April, the government formally abolished this rule. The rationale was that it had discouraged higher-paid individuals, including NHS doctors and surgeons, from remaining in work. Unfortunately for pensioners, the tax authorities are still working through some of the detail and there has been widespread confusion, with HMRC even encouraging those affected to delay taking their pension benefits.

Labour was initially critical of the lifetime allowance’s removal, seeing it as a tax break for higher earners. They said that if in power they’d bring it back in a “fair and reasonable way”, with a carve-out for NHS doctors and other key public-sector workers. But since then, they’ve dropped it from their manifesto – which will avoid adding further confusion. I do hope whoever makes up the next government will prioritise fixing the outstanding issues.

Whoever forms the next UK Government, 2024 and beyond will be a period of significant and wide-reaching change for pensions.

Steven Cameron is pensions director at Aegon UK, an Edinburgh-based provider of pension and investment solutions to over four million UK customers.