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Flat-rate relief and Waspi: Ros Altmann's six point pensions manifesto

Former pensions minister Ros Altmann has set out a six-point manifesto for older people at this year's election.

Six point pensioner plan

Former pensions minister Ros Altmann has published a six point manifesto for older voters at this June's general election.

As many commentators have noted the so-called 'grey vote' is likely to be important when it comes to deciding the winner of the vote. So it stands to reason that the former pension minister has a point with the publication of a manifesto to help older people.

Altmann herself is a Conservative peer in the House of Lords, although as an ally of former prime minister David Cameron and a vocal Remain supporter during last June's referendum she does not hold major influence over the party's policies.

New Model Adviser® looks at the former pensions minister's proposals and how they fit in with what we currently know about

For more details on these proposals visit Altmann's blog here.

Six point pensioner plan

Former pensions minister Ros Altmann has published a six point manifesto for older voters at this June's general election.

As many commentators have noted the so-called 'grey vote' is likely to be important when it comes to deciding the winner of the vote. So it stands to reason that the former pension minister has a point with the publication of a manifesto to help older people.

Altmann herself is a Conservative peer in the House of Lords, although as an ally of former prime minister David Cameron and a vocal Remain supporter during last June's referendum she does not hold major influence over the party's policies.

New Model Adviser® looks at the former pensions minister's proposals and how they fit in with what we currently know about

For more details on these proposals visit Altmann's blog here.

1. Social care crisis

Anyone who read the newspapers ahead of the Budget in March will be aware that the UK is facing a later life care crisis.

By most accounts chancellor Philip Hammond did not go far enough to address the problems in his Budget, and Altmann has a few suggestions on how government could fill the gap.

One suggestion is to remove the 'arbitrary' difference between people who need help for social and for health reasons, in part to reduce the strain on the NHS.

However, Altmann is aware that any proposal to fund social care needs to be funded carefully, so she has suggested that people an incentivised to consider how much they may need for care when saving in ISAs or pensions. Good financial planning in other words.

She also encouraged someone to commit to introducing the £72,000 cap decided by the Dilnot commission on long-term care. This would reduce the amount of personal liability people are responsible for, and was due to be introduced in April 2016 until councils asked for the money to fund social care costs.

According to Altmann, this could be combined with tax-free pension allowances, as was suggested before the Budget, to help ease the care crisis.

'Introducing a Dilnot-style cap on care costs, then allowing tax free withdrawals from pension funds if needed to pay for care, plus introducing a special Care ISA allowance (that can be passed on free of inheritance tax) or allocating some proportion of property value up to a limit of, say, £70,000 per person, would ensure baby-boomers have incentives to prepare for their coming care costs, while also signalling that everyone will need to think about providing for care in old age, as well as pensions,' she said.

2. Two locks are enough

The argument about the value of the state pension is likely to be the main battleground between Labour and the Conservatives at this election, as New Model Adviser® wrote yesterday.

Labour has already committed to maintaining the triple lock policy, which increases the value of the state pension by the higher of earnings, prices or 2.5%, as part of its manifesto.

The Conservatives have yet to rise to the bait, despite the popularity of the policy and the fact they promised to keep it until 2020 in their 2015 manifesto. Of course that manifesto also promised not to raise any income tax or national insurance for five years so there's a chance they will be keen to change it.

Altmann has previously said she does not see a need to keep the triple lock after 2020, and her view was supported by John Cridland's review of the state pension.

In the manifesto for older voters, Altmann said a 'double lock', which preserves the pledge to increase the state pension by prices or earnings, should be enough.

'The 2.5% commitment contained in the triple lock adds billions to the cost (it is estimated that State Pension has cost £3billion more for the years 2010 – 2016 than if a double lock had been in place),' she said.

3. Apply the double lock to pension credit

Altmann makes an overlooked point about the fairness of the existing triple lock pledge as well.

Currently the triple lock guarantees the value of the old basic state pension (around £120 a week) and the new flat-rate state pension (around £160 a week) increase in line with earnings, interest or 2.5%. The pension credit, which is a means-tested benefit for the poorest pensioners, is not included.

Altmann said that although the triple lock should be reconsidered, protections should be extended to help poorer pensioners.

'A much fairer system would see the double lock protection extended to pension credit to help the oldest and poorest pensioners,' she said.

4. Extra help for women - including Waspi

It is fair to say Altmann did not have the easiest relationship with the Women Against State Pension Inequality (Waspi) campaign during her time as pensions minister.

However, since leaving that government role Altmann has become an ever more vocal supporter of the campaign. She has also continued to campaign for better pension rights for women in general.

Firstly, Altmann says the government needs to address how the gender pay gap affects saving for retirement. This should extend to auto-enrolment, since many women workers fall below the £10,000 qualifying earnings threshold.

'Many women work in multiple low paid jobs, in order to fit their work commitments around caring responsibilities. Even if these women’s total income is above £10,000, if they earn less than this in each job, they lose out on auto-enrolment completely,' she said.

Secondly problems need to be addressed with how the state pension, particularly the new state pension, is connected with national insurance.

'The cracks in the National Insurance system penalise far more women than men. Those earning less than £5,876 a year in any one job get no credit for their State Pension, even if they have multiple low paid jobs that would bring their earnings over the National Insurance threshold,' she said.

Altmann also said the government should act to help women who fall under the Waspi campaign. Many claim they were not given enough notice about changes to their state pension age and have therefore lost out.

'The Government should recognise the hardship its failure to communicate properly has caused and should ensure those affected are able to receive some early payment, to compensate for the short-notice increase in pension age which they did not have time to prepare for,' Altmann said.

5. Introduce a 33% flat-rate of tax policy

Even George Osborne probably did not expect the level of backlash that came from the pensions world when the Treasury looked at alternatives to the current tax relief system.

Plans for reforms were eventually dropped, but the issue remains an option on the table for parties, especially given the amount spent on tax relief.

Altmann has previously voiced support for a flat-rate, and included the proposal in this manifesto for older people. She also included a little dig at the government's lifetime ISA product, seen by many as a pension ISA by any other name.

'Instead of confusing people with a lifetime ISA that could also be used for house purchase, the government should introduce a fairer system of pension incentives shared more fairly, with a 33% government bonus being offered to everyone,' she said.

'The annual contribution limit would need to be cut from the current £40,000, and the lifetime allowance should be reformed or abolished.'

6. Encourage people to work longer

As the population gets older more and more people are being encouraged to work longer.

Altmann called on government to do everything possible to ensure that businesses making it easier for people to work into their retirement.

'This will need a radical rethink of workplace practice, as well as greater encouragement of mid-life training, career reviews and apprenticeships,' she said.

'Those who can and want to work flexibly as they get older should be supported positively, with employers required to ensure age is no barrier to ongoing training and re-skilling opportunities. Businesses should take the value of older members of their workforce more seriously and unlock the potential of older workers.'

What about young people?

Those on Twitter and other social media sites have been asking what the parties should be promising younger voters.

Of course the questions raised here will also impact young people, particularly when it comes to saving for retirement.

However, we are interested in hearing your ideas for what should be in a manifesto for young people at this year's election, particularly when it comes to savings, investment and finance. Email your ideas to news@citywire.co.uk and we will collect them together for a manifesto for young people.

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