What a Labour Government Might Mean For Your Retirement Savings

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Күн бұрын

It’s been widely reported recently that a large opinion poll states we are on course for a new Labour party government at the next election. The next general election looks likely to be later in 2024.
By the time the next election does come round who knows exactly what government we will have. If it is to be the Labour party many right-wing media will have you believe that this spells disaster for your retirement savings.
I don’t want to get into which party is better for the country, I want to look at the facts including what the Labour party have said they plan to do with pensions if they were to get into government and what happened the last time the Labour party were in government.
As you would expect with any political party, Labour have made a few headlines when it comes to their pension plans but have been light on the details.
In terms of the State Pension they have refused to commit to the current ‘triple lock’ which increases the State Pension each year by the greater of inflation, average earnings or 2.5%. They have said they will wait to see the state of the public finances before making any decisions.
Interestingly, the Conservatives have also refused to commit to the ‘triple lock’ by the time the next election comes around.
Moving on to private and public pensions, potential new Labour Chancellor Rachel Reeves has said if Labour were to get into power then they would carry out a full review of the pension system.
She did say that she is keen to see more pension fund money invested into UK businesses as she believes this will help grow the economy. At the same time, she also wants to see a consolidation of defined contribution pension schemes making larger super funds.
We have already seen something similar announced by the Conservatives.
The big announcement from Labour which may have been made too hastily was that they plan to reverse the decision by the Conservatives to scrap the pension Lifetime Allowance.
The Lifetime Allowance limits the amount someone can save into pensions without facing an additional tax charge.
The current Conservative government removed the tax charge from April 2023 and from April 2024 will abolish the Lifetime Allowance completely.
There have been rumours about something replacing it and there will still be a limit on the amount of money you can release tax free from your pensions.
Labour have said they will re-instate the Lifetime Allowance.
As a said earlier we are definitely still light on the detail. We will have to wait for those all-important Manifestos to find out more.
Since the last Labour government started in 1997, we have had quite a bit of pension reform. Something to be expected over a 27-year period.
In the early years of the last Labour government a Minimum Income Guarantee, replaced by Pension Credit was bought in to try and lift low paid pensioners out of poverty. This is paid alongside the State Pension.
Stakeholder pensions were introduced in 2001 as a way to encourage more retirement saving especially amongst the low and moderate earners.
These were designed to be simple, low-cost pension schemes with default investment funds, making it easier for someone to set up their own personal pension.
The biggest pension reform came in 2006 when ‘Pension Simplification’ scrapped the eight previous different tax regimes for pensions into one.
Along with it came the ‘Lifetime Allowance’ and the ‘Annual Allowance’ limiting how much people could save tax efficiently into a pension.
The Annual Allowance actually started at £225,000 back in 2007 and the Lifetime Allowance was £1.5million rising to £1.8million by 2010. Much higher than today’s levels.
In fact, it was the coalition government and then Conservatives who reduced these allowances to much lower levels.
It’s been said that auto-enrolment which means every employer must set up and contribute to pensions for qualifying workers has been a good thing, encouraging more people to save for their retirement.
This was actually a policy introduced by Labour in the Pensions Act 2008 and followed through by the coalition and Conservative governments.
Both Labour and the Conservatives have made good and bad changes to the pension system over the years and I don’t see this changing going forward whatever government we have.
Regardless of what pensions look like and what taxes apply it will always be the underlying investment strategy that ultimately drives your returns and boosts your retirement savings.
Getting the right investment strategy is crucial in ensuring not only that you can retire when you want but also to continue living the life you desire in retirement against the threat of rising prices.
The good news is that the global stock markets don’t care about politics.
The declines are temporary, the advance is permanent.
#newlabourgovernment #labourandpensions #protectingpensions

Пікірлер: 87

@stuartregan1627 11 күн бұрын

Government saying on an almost daily basis that they cant afford the state pension but never mention the real problem of public pensions. 2.6 trillion but apparently the real problem is the measly state pension. Stop the Gold plated civil servant pensions.

@user-sz3wl4sv7w 3 ай бұрын

it would be good to see the removal of the ridiculous final salary pension that all the MPs get

@fanfeck2844 29 күн бұрын

All government jobs. Most of our council tax goes on pension deficits

@stuartregan1627 11 күн бұрын

No apparently the real cost is the measly state pension . Public pensions of 2.6 Trillion , civil servents retiring at 60 with million pound pension pots........ nothing to see here .

@petermorris3665 3 ай бұрын

I'm 100% certain that Labour will not repeat the mistakes / mismanagement of the past because those gold reserves, sold at a record low price (Due to going against Bank of England advice and announcing the sale to the markets in advance) are gone forever! Thanks Gordon Clown!

@TomTomicMic 3 ай бұрын

Labour will be atrocious, people think that things cannot get worse and then they do, look at the labour shadow cabinet and it's far worse than the Tory one at present, luckily I get my hands on my pension before labour get their hands on the spending, I'm going for a world stock excluding China if I can. Labour seems to represent a party for the unions rather than a party for the majority of working class people. Unions should not have political ties, their interests should lie in working to better their members working conditions, same as big business should not bank roll the Torys!?!

@JevansUK 3 ай бұрын

Still a better idea than selling off water and power at knock off prices

@Kalarandir 3 ай бұрын

Of course, they could not have sold off national industry and housing for a song because the Tories had already given that away.

@Kalarandir 3 ай бұрын

@@TomTomicMic I will look at history, and the Tories have destroyed the economy of this country for the past 50 years, unless you are employed in the financial services and work in London.

@petermorris3665 3 ай бұрын

@Kalarandir I'm sure that you will agree that after Liebour's union paymasters destroyed the UK car industry the only hope to save jobs and livelihoods in other nationalised industries was to privatise them. BT, Rolls Royce and other privatised businesses etc are now thriving and efficient businesses employing thousands.

@user-hj4ug2yq5x 15 күн бұрын

If Labour win it will be pure hell , i remember when they won in 1974, 1997 it was bad, i hope histiry doesn't repeat it self

@andrewmurray3139 4 күн бұрын

Me too!

@RabianskiT 3 ай бұрын

I’m not British (I’m American-Polish), so I don’t know jack about your politics… I want to share one thing though - I managed to retire in my late 30s (I still work for fun, but I don’t really have to). It’s BEYOND ME how people TRUST politicians to take care of their retirement. If you don’t do it YOURSELF, others will screw you sooner or later. Investing isn’t even that hard nowadays. Put 40% in inflation adjusted BONDS and 60% in global ETFs (index funds). Adjust it slightly depending on your RISK profile and AGE. Take advantage of TAX-FREE accounts if available. That’s FREAKING it.

@richardfowler9901 7 күн бұрын

I'm English and I know what Jack means or bob down

@andrewmurray3139 4 күн бұрын

Well done on retiring at age 30. I am 66 and retired but my main concern is from my 23 year old son. 60/40 equities bonds mix is the standard though I am in favour of peer to peer lending platforms with property backed loans as they pay a little more and seem a little more secure. I believe the same as you that global index trackers wrapped up in whatever tax concession wrapper you can find is probably not only the simplest but also ironically the greatest gain in investment.. regards politicians, here in the UK politician called Gordon Brown messed up peoples pensions and after that I’ve never trusted governments. I am attempting to convince my son this is the investment route to follow, he has the one thing I don’t have: time! We are about to have an election and I would be very surprised if we did not have a labour, i.e. left wing government. As someone old enough to have lived through the 1970s in England, all I can say about that is comedians will have a lot of material to choose from!

@RabianskiT 4 күн бұрын

@@andrewmurray3139 Thanks for your reply! Peer to peer lending is ok as long as it a part of DIVERSIFIED portfolio. However, I wouldn’t put all my capital into it. Regarding your son: You can’t force him to make the right financial decisions… but you should definitely EDUCATE him. When I talk to young adults, they are shocked when I tell them that I don’t need to work anymore. This is something UNUSUAL in my region. I can see that it opens their minds and motivates them. Typical retirement talk is way too BORING for young people. You need to tell them that if they invest in a smart way, they won’t have to work like SLAVES for 50 years. They could be financially FREE even in their 30s. It’s also important to educate about DELAYED GRATIFICATION. An expensive car bought when someone is 20 (long term loan, high interest) can mean financial RUIN; but a few years later, they might be able to get it without worries.

@richardcurtis114 10 күн бұрын

Labour Party........back to the seventys. Last family to leave the UK please turn off the lights

@OneAndOnlyMe 20 күн бұрын

That chart at the end really says it all. No matter the government or the state of the world, the stock market marches onward and upward.

@Mike-lb1hx 3 ай бұрын

Isn't the biggest potential change removing higher rate tax relief on pension contributions. It makes no sense logically as people would be paying tax on earnings not received. If they do they logically need to make employer contributions a taxable benefit in kind with a credit at BR, this would push NQ Nurses into higher rate tax bands

@malcolmwatts2487 3 ай бұрын

I would only vote Labour if in their manifesto they promise to cancel that new tax purge on eBay, Vinted & Deliveroo etc, etc as this is designed to hit the poorest souls in society.

@Polzeath70 3 ай бұрын

You didn't mention Gordon Browns raid on pensions. think it a bit rich Angela Rayner whining about the triple lock pension when she has spent a lifetime on benefits, producing children out of wedlock and living in a council flat and happy to let the taxpayer foot the bill. I am no fan of either side. Seems like you have to pull your own wagon in this life while the politicians grow fat on our labours. I would also say we have the lowest pensions in Europe. I didn't retire until I was 70

@malcolmwatts2487 3 ай бұрын

You're lucky that you can retire of 70, most on low wages but full time workers there can't be a retirement date, these people have to continue till dropping time 90 perhaps.

@OneAndOnlyMe 20 күн бұрын

I'm 53 and considering retiring. I planned ahead, set a goal to make enough to retire young'ish. It's not impossible.

@CupOfSweetTea 14 күн бұрын

Labour come in to power. Everyone goes on strike. Money from pensions invested. No pension. Brilliant

@teessideman.8253 18 күн бұрын

What about Brown's cash grab of private pensions?

@Mike-lb1hx 3 ай бұрын

Sorry isn't the a large potential change the suggestion that people pay tax on investment gains in pension funds? killing the pension industry dead

@DrRock2009 3 ай бұрын

They want you dependent on UBI…

@stshar900 16 күн бұрын

No thoughts about taxing pension dividends

@dereklee7958 16 күн бұрын

They shouldn't be taxing pensions at all.

@C-L66 4 ай бұрын

So are you saying don’t worry? I’m really worried as I tend to take my pensions at the end of this year and are well over the old LTA, so stand to lose loads if the rules are reversed so should I take them before the election?

@OneAndOnlyMe 20 күн бұрын

No, you should wait. Even if Labour does want to make changes, it takes a couple of years to do it.

@user-TonyUK Ай бұрын

As some who can remember the last time they were in Power all I can say is stand by to EMIGRATE. During their last term in Power (mid to late 1970s) we ended up with working just 4 days per week, Supermarkets, shops in General and the Homes were restricted to energy use with very frequent Blackouts. Mass strikes and secondary picket lines, The Minors went on strike and called out other industries to make a point. Ask your Parents and Grandparents if they remember the Winter of Discontent. Never again will I trust that lot who were supposed to represent the Working Class.

@hubblescope1967 Ай бұрын

They were in power '97 to 2010, you need to wake up. NHS much better during this period.

@user-TonyUK Ай бұрын

@@hubblescope1967 I was living and working abroad in Sunny Gibraltar the whold of the 1990s

@fanfeck2844 29 күн бұрын

@@hubblescope1967they loaded trusts with PFI debt that will never be paid off

@STIRLINGMOGFORD 8 күн бұрын

Got Labour.

@megalewy19 19 сағат бұрын

Vote reform uk 🇬🇧 now ❤

@Kalarandir 3 ай бұрын

So many whinging about how crap things are but not prepared to put their hands in their pockets to pay for it. You get nothing for nothing, and that includes state allowances.

@battybibliophile-Clare 2 ай бұрын

The Tories have moved £800 billion from the public purse to their funders, so people have reason to "whinge" about having to pay the highest taxes since WWII, just so they can claw back the waste.

@fanfeck2844 29 күн бұрын

What makes you think people don’t pay? Someone on 25k has an overall tax of 9k.do you want all their wages?

@alanfrost4661 2 күн бұрын

The state pension is not an allowance you HAVE to pay into it its idiots like you that dont know how it works thats the problem

@rayrowland3292 17 күн бұрын

Labour the final nail in the uk coffin.

@stshar900 16 күн бұрын

So don’t tax pension funds dividends

@justso1823 Ай бұрын

Promise to deliver then lie later

@fanfeck2844 29 күн бұрын

They will means test the state pension

@stuartregan1627 11 күн бұрын

Passing legislation to spy on bank accounts.

@NS-pt9rr 3 ай бұрын

Labour win will be a disaster for the UK & its people, they will promise £20/hr & free everything, but we all know it will never happen !! For the working class they will love to hear this but will be put in an even worse place financially !! I am 5 years away from retirement, i have Let properties which i am hoping to sell with the next 3 years, after working hard all my life to build a future for my kids, i refuse to be a Cash Cow for the Govt of the day !! Better the devil you know. TORIES mostly millionaire business background, LABOUR nothing, straight out of uni, thinking they know everything, as always as history shows, they will near bankrupt the UK once again !!

@malcolmwatts2487 3 ай бұрын

Thing is Tories seem to have created only Foodbanks to their name in 14 years in power & little else, workers pay has diminished due to the level of tax allowance being too low at 12,570 this needs to update to 15,000 to make any difference. Hitting the workers is the worst policy a government being guilty of will surely get elected out at the next election. May be Labour not any better but millions of workers have had enough of the current mess.

@OneAndOnlyMe 20 күн бұрын

I disagree. The Tories have done nothing to help savers and investors. At least Labour's vision includes investing in national infrastructure programmes, reducing the red tape for housebuilders and growing the billion dollar renewables sector, and investing in the high tech jobs of the future.

@user-bo8ux3nu9i 12 күн бұрын

@@OneAndOnlyMe pension companys can already invest the old avon county council pension fund have invested in 11 big solar power farms legal genral investing millons of pound in temple island bristol pension money; thousand of house already being built in bristol 4000 house in filton near bristol new wings being being southmead hospitial bristol and R U H Bath millons pounds on torbay hospital on solar farm to run the hospitial i could go on if wish ?

@OneAndOnlyMe 12 күн бұрын

@@user-bo8ux3nu9i That's small fry though. We need mega projects. We need rapid transition to renewables. We need to be bolder. We need 300,000 homes to be built a year.

@user-bo8ux3nu9i 12 күн бұрын

@@OneAndOnlyMe where to in bristol all old industrial site being built on public service streched where the money council tax high in bristol people have to travel miles for work mega thank god we have ride labour on bristol city councl after there 68 million pounds loss on bristol energy

@JohnSmith-qm6xx Ай бұрын

Labour with Brown ruined the pension of the UK. I would not vote Labour if they paid me. I, m for reform.

@Dunk1970 26 күн бұрын

The tax raid on pensions by Gordon Brown (which was omitted from this video for some reason) caused a large proportion of my peers to shun taking out pensions in the first place. Instead, a lot of those people opted to buy second properties with the view that these would provide their retirement income. Labour are now looking to attack these landlords that 'they' basically created.

@OneAndOnlyMe 20 күн бұрын

People keep saying this but completely forget that Jeremy Hunt also wants to raid pensions.

@Dunk1970 19 күн бұрын

@@OneAndOnlyMe Do you have any evidence for that? The Conservatives usually go with the carrot rather than the stick approach. eg Extending the current ISA allowance, but only if you put that extra into UK companies. ie Encouraging people to invest more in UK companies, without taking away what is already in place. It will be interesting to see the details on that, when announced next month. Hunt's pension pledges so far have been to keep the triple lock on the state pension and letting workers choose where the company they work for sends their pension contributions to, helping to negate the problem of the £27bn 'lost' pension funds. Hardly showing signs of a raid. He's also looking to get Pension funds to publicly disclose how much they invest in UK businesses compared to those overseas. He's also wanting to encourage pension firms to provide products where 5% of schemes are invested in UK fledgling firms to help them and the economy. And schemes performing poorly for savers will not be allowed to take on new business from employers. Yes, let's shake our fists at the evil Mr Hunt for helping savers make informed decisions, looking to help UK business and pointing the finger at schemes that are performaning overly badly for pension savers. LOL

@Dunk1970 19 күн бұрын

@Dunk1970 17 күн бұрын

@@OneAndOnlyMe The only things that relate to pensions from Hunt are him committing to the triple lock (which Labour haven't), removing the lifetime allowance upper limit and him trying to encourage pension providers to at least include 5% UK UK internal investment focussing on helping startup firms. Oh the rotter! LOL What are you suggesting he has said that points to a raid?