What’s in store for pensions in 2025?
You make your pension arrangements for the long term – but you can’t sit back and forget about your pension until the time comes to start collecting it.
There were several big changes affecting pensions announced last year. At Continuum we are looking at what they were- and what else will affect your pension in 2025.
1. State pension will rise
The good news is that the state pension will increase by 4.1% in April 2025, thanks to the triple lock pledge, promised by the outgoing Conservative government, and fortunately honoured by the incoming Labour administration.
It means someone receiving the full new state pension will get £230.25 a week, or around £12,000 a year. Those on the older basic state pension will see the full amount rise to £176.45 per week, bringing the total to about £9,200 annually.
But there is a sting in the tail. Retirees will need to watch out for a tax bill due to the full new state pension edging closer to the £12,570 personal allowance.
With income tax thresholds remaining frozen, we are getting closer to the full new state pension being subject to income tax for everyone. Getting help, with ways to provide a tax efficient retirement income, could be a priority in 2025.
2. Deadline to buy NI credits and top up state pension
The end of the 2024-25 tax year marks the deadline to top up your state pension. You have until 5 April to make a backdated claim for National Insurance (NI) credits to 2006 and boost your state pension.
While you can usually only fill gaps in NI contributions for the past six years, under a special concession, the government is letting people claim back to between April 2006 and April 2018.
This concession was supposed to end in April 2023, but the Department for Work and Pensions struggled to cope with demand.
To see if it will pay to top up your state pension, you might want to get some independent expert advice.
3. Pensions dashboards are coming
The pensions dashboard is a multi-million-pound government project that’s been in the pipeline since 2016. When it eventually goes live, savers will be able to access their pensions information online, securely and all in one place.
The government has not yet confirmed when the dashboards will launch to the public, but it’s unlikely to be 2025 and could be 2026 or even 2027 – in the meantime, you might need some help to see just how your pension is growing.
Getting an expert assessment of the performance of your pension investments could be essential to help ensure that your pension remains on track for delivering the retirement you want. For the expert view you need, and for ways to help boost your pension growth, call us at Continuum.
4. More detail about Inheritance Tax (IHT) on pensions
The Autumn Budget announced that from 6 April 2027, “most unused pension funds and death benefits will be included within the value of a person’s estate for inheritance tax purposes”.
The overhaul of IHT has already caused fury among farmers. Pension experts are also concerned about the complexity and fairness of the rules for the rest of us.
HMRC is running a technical consultation. We should find out some more detail about the new rules later this year.
In the meantime, it’s time to look at potential ways to avoid leaving loved ones with a big IHT liability. At Continuum we have solutions that may help you.
5. Pension transfers could become quicker
The regulator is looking at ways to make pension transfers quicker, easier and safer.
Currently, transfer times can range from several days to many months, with some pension providers who prefer to drag their heels and hold on to your money for as long as possible.
At Continuum we can often help if you want to move your pension pot from an underperforming provider.
6. Pension scams are on the rise
Pension scammers are already making a fortune by offering ‘early access’ and ‘performance enhancement’ schemes.
For 2025, the FCA is cracking down on those giving financial advice on social media platforms without any qualifications, or recommending dubious high-risk investments, but the risks remain.
If you want to change your pension, working with an expert you can trust is essential. A call to us at Continuum could offer the help you need, without the risk.
7. Expert advice will remain essential
Whatever changes 2025 has in store for your pension, some things will remain the same. Getting a pension, that works as hard for your money as you do, will require expert knowledge of both the entire pensions market and your particular needs.
At Continuum we can provide the expert support you need.
What’s in store for pensions in 2025? | MoneyWeek
Autumn Budget 2024: Pensions to be subject to inheritance tax
Summary of reforms to agricultural property relief and business property relief - GOV.UK
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment or Retirement strategy, you should seek independent financial advice before embarking on any course of action.
The Financial Conduct Authority does not regulate taxation and trust advice or will writing.
A pension is a long-term investment; the fund value can go down as well as up and this can impact the level of pension benefits available. Pension Income could also be affected by interest rates at the time benefits are taken. Pension savings are at risk of being eroded by inflation.
Levels, bases and reliefs from taxation are subject to individual circumstances and may be subject to change