As you will be aware, there have been recent announcements that involve changes to pensions. Although the triple lock remains for state pensions, there are also revisions to salary sacrifice, and future inheritance tax rules.

While some changes are a few years away, they’re worth being aware of wherever you are in your retirement journey.

Salary Sacrifice
From April 2029, salary sacrifice pension contributions will still be allowed, but the National Insurance (NI) saving will be limited. Only the first £2,000 per year will attract an NI saving. Any amount above this will not. Income tax relief remains unchanged.

Pensions and inheritance tax (IHT)
Plans to include most pensions in an estate for inheritance tax from April 2027 remain in place. However, a proposed new administrative change should make it easier for estates to meet any IHT due, as personal representatives (rather than only the beneficiary) will be able to instruct scheme administrators to withhold 50% of taxable benefits for up to 15 months and pay the IHT in certain circumstances. This won’t apply to exempt benefits, funds under £1,000, or continuing annuities. We’re waiting for further guidance on this.

State pension changes
The triple lock means the state pension is expected to rise by 4.8% from April 2026, increasing the full new state pension to £241.30 per week. Pension credit will also increase by 4.8%. From 2027, steps will be taken to reduce small income tax bills for those whose only income is the state pension.

Other pension changes
From April 2027, some well-funded defined benefit pension schemes may be able to pay surplus funds to members. Inflation increases may also apply to some pre-1997 pensions held within the Pension Protection Fund.

Please call us if you’d like to review how these changes might affect your retirement plans.