The Conservatives would introduce a “pensions tax guarantee” if re-elected, promising no new taxes on pensions, in their election manifesto launched on Tuesday.

“Under our new Pensions Tax Guarantee, the Conservatives will not introduce any new taxes on pensions. We will maintain the 25% tax free lump sum and maintain tax relief on pension contributions at their marginal rate. We will not extend National Insurance to employer pension contributions,” the document reads. 

Free bus passes, Winter Fuel Payments, free prescriptions and TV licences for pensioners would all stay the same as well, and “we are carefully considering the Ombudsman report into WASPI women and will work with Parliament to provide an appropriate and swift response”. 
   

   

The guarantees on tax reliefs in accumulation are in addition to a commitment to introduce an “age-related personal allowance” so that state pensioners do not pay tax from the same level as workers while the personal allowance threshold remains frozen at £12,570. The policy is dubbed ‘triple lock plus’. The full new state pension is currently at £11,502 and set to go higher as both main parties have said they would retain the triple lock rule that increases state pensions annually by the highest of earnings, inflation and 2.5%. 

Thinktank the Institute for Fiscal Studies has calculated that by 2029-30, doing so would cut pensioners' income tax by £130 a year, but because the allowance is frozen, they would still be paying more tax at the end of the next parliament than they were at the beginning of the last.

"A pensioner paying the basic rate of tax would be paying £490 a year more in tax in 2029–30 than under the 2019-20 tax system," according to the IFS.
   

 

The 'triple lock plus' could prove popular with some older voters, said the chief executive of TPT Retirement Solutions David Lane, with TPT’s research finding that 63% of those aged 55 or older want the next government to maintain the triple lock.  

 

“Many people are struggling to save enough for retirement and will rely on the state pension. If this policy isn’t introduced and income tax thresholds remain frozen, pensioners are expected to start paying income tax on their state pension in 2027. Anyone who depends on the state pension for their retirement may find it difficult to cope if they have to start paying this tax,” Lane said.  

The manifesto does not include anything about the state pension age, which is due to go up to 67 for people born after April 1960 and expected to rise to 68 in the mid-2040s. It also does not propose unfreezing the personal allowance, which was fixed at this rate in 2021 by Rishi Sunak when he was chancellor. 

The Conservatives’ triple lock plus policy is “a pretty naked grab for older votes and an attempt to create a state pension tax trap for Labour, who have also committed to the triple lock but not to unfreeze the personal allowance”, said Tom Selby, director of public policy at investment platform AJ Bell.  

  

“Beyond pure election tactics, it is hard to think of a good reason to increase the personal allowance for pensioners alone,” he added. 

 

It would be better “to come clean about the aim of the triple lock, which has never been articulated, and then set a sensible path to achieving that aim”, Selby argued. 

“Instead, we are left with the random ratchet of the triple lock with no clear goal, and the increasing likelihood the state pension age will need to rise faster to cover the cost – meaning it will be those below state pension age who end up paying the price again.”  

The triple lock policies are designed to attract the grey vote, agreed Steven Cameron, pensions director at provider Aegon.  

  

He suggested there could have been more in the manifesto: “Unfortunately, a number of important future pensions developments don’t get a mention, including when enhancements to automatic enrolment might be advanced.” 

 

This was a sentiment shared by Tim Middleton, director of policy and external affairs at the Pensions Management Institute, who said: "We note that the Conservatives’ ‘triple lock plus’ will provide security to those who are already past State Pension Age, but are frustrated that there was little new announced concerning those who are currently still in work. It would have been encouraging, for example, to have included further reforms to auto-enrolment.”  

 

 

Cameron pointed out that the Conservatives have recommitted to their plan on social care funding, which was due to be implemented in October 2023 but was delayed for two years. 

 

The manifesto says: “At the next Spending Review, we will give local authorities a multi-year funding settlement to support social care and will take forward the reforms in our ‘People at the Heart of Care’ White Paper.” 

 

Under this policy, there would be a cap on personal care costs of £86,000, and the asset floor to be eligible for council support would rise to £100,000, from £23,250. 

 

In 2019, Boris Johnson promised in his manifesto that nobody would have to sell their home to pay for social care, after proposed reforms to adult social care funding had derailed Theresa May’s campaign in 2017. 

 

The Tory party also said it would abolish the 9% national insurance contribution of the self-employed by the end of the next parliament, without this impacting their state pension entitlement. 

“The abolition of the main rate of Class 4 national insurance contributions builds on our abolition of Class 2 contributions for self-employed people from April this year. This will not affect their entitlement to the state pension,” the document states. 

 

The Conservatives called it “a massive simplification of the tax system” that would mean 93% of self-employed would no longer pay self-employed national insurance. 

 

The IFS warned such a move would widen the gap between how employees and the self-employed are taxed. 

 

Director Paul Johnson said: “The promise to abolish the main rate of self-employed NICs altogether would doubtless be welcomed by the self-employed but would further entrench the tax advantages of self-employment over employment.” 

 

Some welcomed the proposal and would have liked it to go further. Simon Kew, head of market engagement at consultancy Broadstone, said: “The proposed national insurance cut for the self-employed will support their financial health, and it is positive that this will not impact their state pension, but we would have liked to see further detail of a plan to boost adequate pension saving among this group.” 

  

The party is also seeking to get veterans on its side, saying if elected, it would bring forward measures so that War Pensions and Armed Forces Compensation Scheme awards are not counted as income for benefits and pensions purposes. 

The Conservative manifesto follows the Liberal Democrats', who launched theirs on Monday. The LibDem plans include a proposal to require pension funds to show that their portfolio investments are consistent with the Paris Agreement. The Labour party’s manifesto is expected on Thursday.