The Green Party has published its 2024 manifesto, revealing plans to require UK pension funds to remove fossil fuel assets from their investment portfolios by 2030, and to equate the rate of pension tax relief with the basic rate of income tax.

In the manifesto, which was published yesterday (12 June), the party said that it would require non-bank financial institutions, such as UK pension funds, investment funds, mutual funds, brokers and insurance companies that sell policies in the UK, to remove fossil fuel assets from their investment portfolios, securities transactions and balance sheets by 2030.

In addition to this, it also committed to ensuring that pensions are always uprated in line with inflation and keep pace with wage rises across the economy.

It also announced its intent to equate the rate of pension tax relief with the basic rate of income tax if elected, to help fund social care that will allow elderly and disabled people on low incomes to live in dignity.

Alongside this, the manifesto outlined plans to work with the higher education sector to tackle the challenges posed by changes to employer contributions for the Teachers’ Pension Scheme (TPS).

However, industry experts noted that there is currently little detail surrounding these plans, and Broadstone investment consultant, Matthew Downey, warned that while "the devil is in the detail", a policy such as the one proposed on fossil fuel investments could have unintended consequences.

He explained: "There is demand from the pension industry to decarbonise and engage with companies to improve working practices: if pension schemes are mandated to remove fossil fuel assets, we do worry that these may be bought up by hedge funds and other investors who may not be as interested in how the underlying companies operate.

"As an asset owner, the ability to engage and influence corporate behaviour is arguably an effective way to implement change.

“We would also need to see how the plans for the Financial Conduct Authority (FCA) to stop shares relating to fossil fuel exploitation are implemented. As the manifesto stands, the wording does not prohibit debt financing so there are potential loopholes which could be exploited."

Reflecting on the plans to equate the rate of pension tax relief, AJ Bell director of public policy, Tom Selby, pointed out that the party had dedicated "just one sentence to a proposal for a colossal pension tax raid that would fundamentally upend the UK retirement system".

“The proposal appears to have been put forward with little thought to the challenges it would create," he added, warning that "billions of pounds of higher and additional rate tax relief is paid to members of defined benefit schemes, with most of these workers now employed in the public sector".

"If a flat rate of pension tax relief at 20 per cent was introduced, these employees – including doctors in the NHS – would presumably need to be clobbered with a tax charge of thousands of pounds in order to shift them to the proposed flat rate," he continued.

"This would inevitably lead to huge unrest, the potential for key staff exiting public sector roles and new waves of strike action."

In addition to this, Selby cautioned that the idea also raises questions of fairness between generations, warning that "this proposal would effectively be a twin attack on the public sector and younger pension savers".

---