In an ominous update for UK workers, the government has confirmed changes and reviews to pensions, including adjustments to unused pension death benefits and the State Pension age.
Added to the fact that almost 50% of working-age adults currently aren’t making private pension provisions, this news could affect the retirement plans of millions of people.
What are the latest pension changes?
Unfortunately, it’s bad news for unused pensions and younger workers. The government is expanding the scope of Inheritance Tax (IHT) and increasing the minimum age to claim the State Pension.
Unused Pensions
Draft legislation that will take effect on 6th April 2027 is due to make most unused pension death benefits liable for IHT (though death-in-service benefits will be exempt).
State Pension Age
The State Pension Age (SPA) will increase to 67 years old by March 2028. An increase to 68 years old is set for 2044–2046, which will impact people born after 6th April 1977.
The next increase hasn’t been brought forward yet due to uncertainty about life expectancy.
Not enough people are saving for private pensions
Unsurprisingly, the UK government is very concerned that so many people aren’t saving privately for their own retirement pot, though this is typically due to low earnings.
There are over 3 million self-employed earners without pension savings, and the situation is worse for women and some ethnic groups. Overall, around 40% of people aren’t saving enough.
According to current estimates, a single person would need £32,000 a year to maintain a moderate lifestyle, while a couple would need almost £44,000 a year.
As the full State Pension is just under £12,000, this alone will not be enough to live on.
Due to such low numbers, even with employees being enrolled into pension schemes automatically, a pensions commission will investigate the obstacles to pension saving and publish a report in 2027.
Need help with pension savings?
It is important for working-age adults to make adequate provisions for their future. If you need professional guidance on setting money aside for your retirement, we can help.
Here at gbac, our experienced Barnsley accountants can assist self-employed individuals and employed workers to plan and save for their family’s financial future.
Whether you need help tracing lost pensions or setting up new savings accounts for your private pension, you can come to us to discuss the most tax-efficient options for your circumstances.
Simply phone our team on 01226 298 298 or email your query to info@gbac.co.uk and we’ll be in touch.