As politicians limber up for an election race, they’ll be hoping to kit themselves out with the policies that give them the best chance of a win.
With money so tight for so many millions of people, all eyes will be on the impact on our finances.
Here are five key things to watch.
This article isn’t personal advice. Pension, ISA, and tax rules can change, and benefits depend on your circumstances. If you’re not sure what’s right for you, seek advice.
Get our latest insights on what the General Election could mean for you and your money.
The State Pension
The future of the State Pension – most notably the triple lock – is a major issue. There’s support for it from both Labour and the Conservatives, but it’s a divisive policy with younger generations shouldering the ever-burgeoning cost.
Our recent research* showed just 16% of the 18-34 age group would be more likely to vote for a party pledging to keep the triple lock. This compares to well over half of the over 55s.
Regardless of who wins this election, people need certainty as to what they’ll get from the State Pension.
The eventual victor needs to implement a review of the system, and the triple lock within it, so people can plan for their future.
*Data taken from a survey of 2,000 people undertaken by Opinium on behalf of HL in April 2024.
Lifetime allowance and pension taxes
The outcome of the General Election will hopefully bring some much-needed clarity on the lifetime allowance (LTA).
The Conservatives scrapped it, but Labour has said it wants it reinstated, and pension investors need certainty.
Any reform of the pension tax system should be done with the aim of incentivising people to save for their futures, without having to worry about being tripped up by complex rules.
Annuities
The annuity market has been riding high.
The expectation is that as interest rates start to fall, so will annuity incomes.
However, given that a General Election makes the prospect of a rate cut less likely this summer, we could see annuity rates stay higher for a bit longer.
Savings
The savings market moved quickly in response to the election announcement.
The Bank of England is going to want to avoid changing the base interest rate around the time of an election. That means the savings market has now priced in a delay to at least September.
Savers could benefit, because it might mean a pause in savings rate cuts, so easy-access savers could continue to earn rates at or above 5% for a while longer.
If you have cash you can tie up for a period, it also opens a potential window of opportunity, because fixed rates around 5% could hang around for longer too.
However, it’s still worth acting sooner rather than later. The last week or so has shown how quickly things can change, so it’s worth taking advantage while you can.
If you choose a fixed-rate product, you can’t usual get access to the money before maturity. Inflation reduces the future spending power of money.
ISAs
As taxes rise, ISAs are becoming even more important for investors.
Labour has spoken about the need for simplification in the past, while the Conservative government is currently consulting on the ‘British ISA’.
It will be interesting to see how this shakes out. We can only hope that any changes end up making the range even simpler and easier to use, rather than accidentally introducing needless complications.
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Article image credit: Carl Court/Getty Images
