Labour announces freeze to State Pension Age in manifesto

Labour has announced plans to freeze any increases to the State Pension Age beyond 66, should it get into power after the General Election.

Unveiling its manifesto at a launch in Birmingham, party leader, Jeremy Corbyn, called the new policies ‘a radical manifesto’ and said he was ‘very proud of that because we have to change our ways in this country.’

Labour has been highly critical of government plans to increase the State Pension Age, with improvements in the UK’s average life expectancy generally slowing since 2010.

AJ Bell senior analyst, Tom Selby, commented: “Make no bones about it – this is a gargantuan promise from Labour with enormous ramifications for those affected, society as a whole and long-term Government spending.

“It is therefore incredible that the impact this will have on taxpayers doesn’t appear in the policy costings. This may simply be because planned increases in the state pension age run beyond the next Parliament, but such a short-term approach to something as vital to the long-term future of the UK as state pension reform is hardly encouraging.

“The increase in the state pension age to 66 currently underway is the first increase since the Second World War, during a period when life expectancy across the UK has risen at unprecedented levels. If state pension increases are to be permanently shelved, Labour needs to explain who will pay the extra cost in the long-term.”

The manifesto also makes a pledge to restore Pension Credit for mixed-age couples, after changes introduced by the DWP to Pension Credit rules earlier this year meant pensioners can no longer apply for Pension Credit if their partner is of working age.

“Instead they have to apply for Universal Credit until their partner reaches state pension age,” Selby added.

“This is important because a couple can usually receive £255.25 a week on Pension Credit, versus £114.81 on Universal Credit.

“The Government’s decision to shift its approach here was unsurprisingly hugely unpopular and Labour’s planned reversal would be hugely welcome to those who are set to miss out.”

Elsewhere, the Labour manifesto is heavily focused on changing the tax system, with already well documented plans to cut the threshold for the 45% income tax rate from £150,000 down to £80,000 – a move the party has said could create £5.4bn.

Commenting on Labour’s tax pledges, AJ Bell personal finance analyst, Laura Suter, added: “The party will also bring the tax on gains from investments in line with income tax, echoing similar pledges by the Green Party. The pledge to bring capital gains and dividends into the income tax regime will raise £14bn for the Government.

“The move to crack down on dividends will hit business owners who pay themselves through dividends rather than income, but also investors, with the capital gains tax allowance being slashed from £12,000 to £1,000 – which will cost up to £4,400 a year for those earning £50,000 or more.”

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