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Now the dust is beginning to settle on the election, Labour has to turn to the serious work of implementing its manifesto promises.
Leading industry pensions and advice sector experts have welcomed Labour’s victory as a chance to push forward some key financial reforms but some have raised questions about the clarity of Labour's pension and advice priorities.
Financial provider Aegon, which has a growing Financial Planning arm, has urged the incoming Labour government to press ahead with a pledge to set up an independent Pensions and Savings Commission and to do this within the first 100 days of taking office.
Pensions expert James Jones-Tinsley reviews the election result and its impact on the pensions landscape.
What has surprised me most about the outcome of yesterday’s General Election is not the much-predicted Labour landslide victory, but how well the smaller political parties have fared, largely at the expense of the Conservative Party.
At the time of writing, the Green Party have 4 seats, the Reform Party have 4 seats, a number of Independent candidates – including Jeremy Corbyn – have gained parliamentary seats, and while the Scottish Nationalist Party’s hold over Scotland’s political landscape has been reduced to single figures, the Liberal Democrats have secured their best result since the 1920’s.
The Labour Party faces a tough inheritance on many fronts.
Where pensions are concerned, arguably the top priority is to finalise the outstanding legislation in connection with the abolition of the Lifetime Allowance, which was cut short when the former Prime Minister, Rishi Sunak, decided to go out into the pouring rain without his umbrella and call the election.
The Labour manifesto speaks of a “review of the pensions landscape”; a broad-brush statement, with no time limits attached.
However, given that the incoming Chancellor, Rachel Reeves, has stressed which taxes she will not increase, one wonders if an emergency Budget in the near future might focus on the ‘low hanging fruit’ that pensions offer the new government, in their bid to raise funds from elsewhere?
Firstly, pensions tax relief, which currently costs the government over £40 billion each year, could come into view. The last nine years have seen reforms to pensions tax relief discussed at many junctures, but to date, individuals can still obtain pensions tax relief at their highest marginal rate of income tax.
An incoming government with a significant majority will always deliver bad news to the country early on in their tenure, and so expect reform of pensions tax relief; potentially a move to a single percentage rate of relief for all individuals, regardless of how much income tax they pay. If this was as low as 20%, it would save the government billions of pounds each year, at a stroke.
Secondly, the tax treatment of pension death benefits for those individuals who die below the age of 75 could be up for review. The ability to pass on these benefits to surviving recipients free of income tax for the rest of their lives has been criticised by think-tanks including the Institute for Fiscal Studies as “overly generous”, and so a move to impose the payment of income tax on these pre-age 75 distributions would undoubtedly be tempting to a new government.
Thirdly, Inheritance Tax (IHT) was not included in Ms Reeves’ list of taxes that will remain untouched, and one wonders if the current exemption from IHT that trust-based pensions enjoy, may be under threat. I sincerely hope not, as the ability to pass on pension death benefits to surviving beneficiaries via the discretion of the trustees of the pension arrangement, without the potential imposition of IHT on those benefits, is a powerful benefit for those recipients who are arguably at their most vulnerable.
Fourthly, maintaining the ‘Pensions Triple-Lock’ for annual increases to the State Pension.
Yes, the Labour manifesto stressed they would maintain this promise, in order to secure the pensioner vote, but its affordability over time will only increase, and so I fully expect the new government to call for yet another review of increasing the State Pension Age to 68 and beyond, far earlier than is currently set out in legislation.
James Jones-Tinsley FPMI APFS is a Self-Invested Pensions Technical Specialist at Barnett Waddingham LLP
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UK market indices rose strongly this morning after news of the landslide Labour Party election victory - widely expected - was absorbed by analysts.
Data provider Defaqto has named the UK’s top performing Managed Portfolio Services (MPS) in its inaugural Defaqto MPS Comparator Awards.
The new awards are designed to identify “consistently strong” MPS performance based on five years of discrete risk-adjusted measures.
The Defaqto MPS Comparator, launched recently, compares like for like portfolios.
The top performers for 2024 have been named across five MPS Comparator cohorts: Defensive; Cautious; Balanced; Growth and Adventurous. The overall winners across the Comparator cohorts were Rivers, Credo, Fundhouse, Waverton and Tatton (see below).
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Each Comparator has five awards: an overall winner (the most consistent performing portfolio) and four highly commended winners (the next four most consistent performing portfolios in the respective cohort).
Only those portfolios which provided real investment performance were eligible.
The 2024 winners are:
Comparator: Defensive
Winner |
Rivers Cautious Portfolio |
Highly Commended |
Ascencia Safety First 2 Waverton Conservative Portfolio Ascencia Safety First 3 Waverton Defensive Portfolio |
Comparator: Cautious
Winner |
Credo MAP Core 45/55 |
Highly Commended |
Rivers Balanced Portfolio Waverton Cautious Portfolio Credo MAP Core 60/40 Quilter WealthSelect Managed Blend 6 |
Comparator: Balanced
Winner |
Fundhouse SRI Global Growth |
Highly Commended |
Fundhouse SRI Global Balanced Waverton Balanced Portfolio Credo MAP Core 70/30 Rivers Adventurous Portfolio |
Comparator: Growth
Winner |
Waverton Growth Portfolio |
Highly Commended |
PAM Aggressive Portfolio ebi Vantage Earth 80 Quilter WealthSelect Managed Blend 9 Quilter WealthSelect Managed Active 9 |
Comparator: Adventurous
Winner |
Tatton Managed Global Equity |
Highly Commended |
Tatton Tracker Global Equity Tatton Core Global Equity Quilter Cheviot Global Growth ebi Vantage Earth 90 |
Source: Defaqto
John Milliken, CEO at Defaqto, said: “Everyone in the industry is talking about MPS, so we’re very excited to share this new insight and publicly recognise top-performing providers. With many products in the market, congratulations to the providers who have been awarded this year.”
Andy Parsons, insight manager for investments at Defaqto, said: “Our methodology is linked to the release of our MPS Comparator tool. We have computed the leading models, per peer group, on a risk adjusted, 5-year discrete net, performance basis, as at the end of March 2024.
“The awards are at individual platform MPS portfolio level and to aid the selection process, we identified the most consistent MPS portfolios within each Comparator based on a variety of quantitative data measurements. The results were then assessed and reviewed by the Defaqto Investment Committee, and the top performers rewarded with ‘Winner’ and ‘Highly Commended’ awards.”
Defaqto’s DFM coverage reviews over 120 DFMs and around 2,700 portfolios, providing data such as performance, fees, and asset allocation. Defaqto updates MPS performance data monthly.
MPS Comparator is available for advisers and providers and it will be available soon on Defaqto Engage, the fintech’s Financial Planning suite.
Defaqto is owned by Fintel which also owns SimplyBiz.
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