Election 2024 – Conservatives manifesto and pensions

In the second of our series of manifesto reviews, we’ve looked at what the Conservatives are promising on pensions in their manifesto (The Conservative and Unionist Party Manifesto 2024 – Clear Plan, Bold Action, Secure Future).

Summary

The Conservatives have made a concerted pitch to pensioners with their ‘Triple Lock Plus’ policy (also referred to as a Quadruple Lock). This takes the existing triple lock formula (State Pensions rising by the higher of CPI, average wage increases and 2.5%) and, from 6 April 2025, would apply the same rises to a new age-related threshold for paying income tax.

This is designed to prevent someone whose only taxable income is the State Pension from having to pay income tax (the current full rate of the State Pension is £11,502.40 a year, and the income tax basic rate threshold is £12,570). If the basic rate threshold is not increased, then the State Pension will be higher than the threshold within four years (sooner if increases are more than the minimum 2.5%).

There is a commitment not to introduce any new taxes on pensions and to maintain the tax free lump sum. This suggests continuation with the status quo of the post-abolition of the lifetime allowance regime and the current system of tax relief for pensions.

Policy area	Manifesto text	Comment	Page
State Pension – triple lock	Cut tax for pensioners with the new Triple Lock Plus, guaranteeing that both the State Pension and the tax free allowance for pensioners always rise with the highest of inflation, earnings or 2.5% – so the new State Pension doesn’t get dragged into income tax.	This takes the current triple lock on state pensions (i.e. rising by the higher of CPI, average earnings growth and 2.5%) and adds a fourth element with effect on and from 6 April 2025. This new age-related annual allowance will also rise by the same amount as the triple lock, meaning that the State Pension is always below the tax-free threshold.	15
State Pension – self-employed	National insurance for the self employed will be abolished entirely by the end of the next Parliament.	To fulfil the pledge, four million people will have their National Insurance contributions reduced from the current 9% rate for the self employed to zero. They will still be entitled to a full State Pension.	14
Pensions taxation	Under the Pensions Tax Guarantee, the Conservatives will not introduce any new taxes on pensions. They will maintain the 25% tax free lump sum and maintain tax relief on pension contributions at their marginal rate. They will not extend National Insurance to employer pension contributions.	The Conservative position on the post-LTA abolition tax free lump sum is ambiguous. The manifesto states that they will “maintain the 25% tax free lump sum”. Our reading of this is that this maintains the status quo (i.e. the new lump sum allowance regime).	15
Pensions taxation – War Pensions and Armed Forces Compensation Scheme	The Conservatives will bring forward measures so that War Pensions and Armed Forces Compensation Scheme awards are not counted as income for the purpose of benefits and pensions.	This is part of a broader package of measures for veterans. It isn’t clear what the cost would be in terms of lost tax revenue.	31
State Pension – WASPI	We are carefully considering the Ombudsman report into WASPI women and will work with Parliament to provide an appropriate and swift response.	No promise of redress / compensation is included in the Conservative’s manifesto.	15