Even though we’re just one month into 2025, there is already much to discuss in the world of pensions. Here we’ll explore the announcements already made this year, along with events to watch out for throughout the year.

New Pensions Minister

On 14th January 2025, Torsten Bell was appointed as Pensions Minister. He replaced Emma Reynolds, who was moved to become Treasury Minister following the resignation of Tulip Saddiq. Whilst changes in minister can bring uncertainty to the sector, there is confidence that Bell’s background in economics will stand him in good stead for this role.

State Pension increase

As per the announcement in the Autumn Statement last October, the State Pension will increase in April. This is due to the Triple Lock rules which were upheld by the government. The increase will be by 4.1%, matching the earnings growth from May to July 2024. So, the State Pension will rise as follows:

Basic State Pension – rising by £6.95 per week, from £169.50 to £176.45
Full new State Pension – rising by £9.05 per week, from £221.20 to £230.25

Workplace Pensions

A Pension Review is currently being undertaken by the government, surrounding workplace pensions. Phase 2 of the review was due to commence at the end of 2024, but the start date was delayed, with no new date currently proposed. The purpose of the phase was to determine the feasibility of reducing the minimum age for auto-enrolment. The age threshold is currently 22, but the review is looking to reduce this to 18. They are also looking to increase minimum contributions. Currently, the minimum overall contribution is 8% on income over £6,240 but below £50,270, with the employer’s contribution making up a minimum of 3% of this.

New Pensions Minister, Torsten Bell, has confirmed that the threshold for auto-enrolment into workplace pensions will remain the same in the 2025-2026 financial year. This means that auto-enrolment will continue to be triggered when an individual earns £10,000 per year.

Following the Autumn Statement in October 2024, there was concern that employees may see the contribution from employers into their pension decrease. This is due to the additional financial pressure felt by businesses following the increase in National Insurance contributions for employers. Enough time has not yet passed to know the full impact of this announcement, but financial commentators will be following this over the next year to determine if a downward trend occurs.

A further element of pensions that will be followed throughout 2025 is the Pension reform announced by Chancellor Rachel Reeves last year. A consultation period was held at the end of 2024, which concluded in January, the results of which have not yet been released. We’ll bring you more on this as it is announced.

Inheritance Tax

In the Autumn Statement, Rachel Reeves announced that unused pension funds and death benefits from a pension will be incorporated into a person’s estate for Inheritance Tax purposes. This will begin from April 2027. A consultation surrounding the technical process required for this change ended in January. Again, further announcements are expected in the coming weeks and months. Keep an eye on our blog for more information about this as it becomes available.

Pensions Dashboard

The government are looking to make it as easy as possible for individuals to have access to information about their pensions. The plan is for information about all held pensions to be accessible, and consolidated into one place on a dashboard. The government hope this will help individuals approaching retirement to better plan their retirement from a financial standpoint.

Whilst the rollout of this dashboard is in its early stages, the first pension schemes are likely to move onto the dashboard through 2025. The use of this framework is unlikely to become more widespread, though, for another year or two.

If you like the concept of consolidated pensions being viewable in one location, contact our team. The Willday Wealth Management team can manage your pension portfolio on your behalf. We’ll work with you to set your retirement goals and start building towards a meaningful pension for your future. Our app will allow you easy access to your pension details too!