So why do the pension proposals contained within their recently published manifestos matter?
If the polls are to be believed, the Lib Dems could well become the ‘centre’ in a new coalition government with the Conservatives or Labour. Alternatively, they might need to prop up a minority Tory or Labour government through some form of agreement.
It’s a similar picture with UKIP, who might provide the handful of seats David Cameron needs to stay at No. 10 Downing Street.
If any of these scenarios come to pass, then the pension proposals of either party might have some relevance; although I suspect some of their other priorities will take the lead in any coalition or support agreement negotiations.
Liberal Democrats on pensions
The Lib Dems want to review tax relief on pensions, making the case for a single rate of pensions tax relief.
According to the Liberal Democrats manifesto: “We will establish a review to consider the case for, and practical implications of, introducing a single rate of tax relief for pensions, which would be designed to be simpler and fairer and which would be set more generously than the current 20 per cent basic rate relief.”
They are also supporting recent Budget proposals for the creation of a second-hand annuity market, which would be introduced in April 2016 should the Conservatives or Liberal Democrats form the next government.
What about UKIP?
UKIP want to see the State Pension age lowered to 65 (its current level, although it is scheduled to rise), with the introduction of a ‘retirement window’ allowing older workers to defer their pension to receive a larger payment in the future.
They also want to introduce a new criminal offence to prevent cold-calling to pension savers; possibly for the first time, this is a UKIP policy I find myself supporting!
Finally, UKIP wants to introduce a new investment programme for financial education in schools, which it describes as currently “abysmal”.
Other pension policies
The Green party also deserve a mention in respect of their pension proposals. They want to make dramatic cuts to tax reliefs for personal pension contributions to fund a higher State Pension, known as a new Citizen’s Pension.
This Citizen’s Pension would be paid at a level of £180 a week for a single pensioner and £310 a week for a couple. It would be paid regardless of National Insurance contribution record.
And not to leave out Labour when it comes to pension proposals.
Labour wants to introduce a new annual allowance of £30,000 on tax free annual contributions to pensions.
Both Labour and the Tories plan to limit tax relief available to those earning more than £150,000, the Conservatives as a result of their £1m family home inheritance tax proposals.
Change is inevitable
It seems that regardless of which party forms the next government, there are likely to be changes to the UK pension system.
What do you make of these pension proposals and do you think any of them could be introduced during the course of the next parliament?