Several major changes are coming to pensions in the near future, but most UK adults have no idea, new research has revealed.
Just over half of Britons are “not aware at all” of the upcoming changes, a survey of 1,500 adults by Schroders Personal Wealth (SPW) found, despite their potential to massively alter retirement plans and future incomes.
Director of financial planning at SPW, Alex Gaita, told the Financial Times that the changes will be “deeply personal,” affecting “when people can stop working, how much they can afford to spend, and what they can leave behind”.
In August, the government launched a new Pensions Commission, which aims to deliver an improved pensions system and ensure all people have enough money in retirement.
It came after a new review into the state pension age was launched, possibly laying out the groundwork for the rise in the age of eligibility to 68 in future.
For the time being, there are already several pension policy changes for savers to be aware of. Here’s what you need to know:
Triple-lock boosts state pension 4.7 per cent – April 2026
The state pension looks set to rise by more than £560 a year from April 2026, based on 4.7 per cent wage growth that was measured on Tuesday, 16 September.
This will take the full state pension from £230.25 a week to £241.05, or £11,973 per year to £12,534.
The triple-lock guarantee, first implemented in 2011, means the state pension increases year-on-year by the highest of three measures. These are: inflation, wage growth, or 2.5 per cent.
While September’s inflation figure has not yet been revealed, it looks unlikely that the figure will exceed the wage growth figure, with most experts predicting around four per cent.
Pension age rises to 67 – 2026 to 2027
The state pension age will officially rise next year from 66 to 67, meaning millions of workers will have to wait longer for retirement. The planned changes have been set since 2014, and will affect men and women equally.
While people can choose to retire earlier than this date, and may choose to do so if they have a private pension, the state pension age is the earliest anyone can begin claiming the government-supplied pension.
In 2026, all workers born after April 1960 will start to see their state pension age rise. Here’s what that could mean for you:
Inheritance rules around pensions changes – April 2027
At Labour’s last Autumn Budget, Chancellor Rachel Reeves announced that pensions would be subject to inheritance tax by April 2027.
Under current rules, private pensions are not counted as part of a person's ‘estate’ – all the assets they own when they die, on which inheritance tax may have to be paid.
UK inheritance tax is applied at a rate of 40 per cent to assets worth above £325,000, rising to £500,000 if a property is included in the estate. This means that the majority of people do not pay it.
Assets can be passed on to a spouse or civil partner tax-free, alongside the inheritance tax allowance. This means that when the surviving partner dies, the combined threshold can be up to £1m.
Further details are expected on the inheritance tax changes, including whether the threshold could be raised to account for pensions being included.
Tax-free lump sum withdrawal – April 2028
Under current rules, workers can usually take up to 25 per cent from each of their pensions from age 55 without paying any tax, up to a maximum of £268,275. Anything after this will be subject to income tax.
From April 2028, the age at which this is permitted will increase to 57 – meaning savers should prepare accordingly.
Those who are 55 or 56 when this comes into effect should be aware that they may lose access to their pension pot after this date, even if they have already taken out some money.
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