Throughout your working life, it’s important to pay into your pensions and be proactive about managing them, so you can maximise the growth you receive.
Your pensions are an excellent tool when saving for retirement as they are tax-efficient and any funds you contribute are normally invested on your behalf.
However, the rules around pensions change sometimes, and new legislation might affect your ability to grow your savings and retire when you want to. Staying up to date with these changes is crucial if you want to make the most of your pensions.
Here are five important pension developments to be aware of in 2025 and beyond.
1. State Pension changes
Your personal and workplace pensions will likely provide a large portion of your income in retirement. However, don’t underestimate the State Pension – it could still be a valuable supplement to your other savings because the amount increases each year, and you receive payments for the rest of your life.
In 2024/25, the full new State Pension amount is £221.20 a week, and this is set to increase because of the triple lock.
Each year, the State Pension rises by the higher of:
- The rate of inflation
- Average wage growth
- 2.5%.
Consequently, the BBC reports that on 6 April 2025, the full new State Pension amount will increase by 4.1% – in line with wage growth – to £230.25 a week.
So, if you’re already drawing your State Pension, your income could rise soon. Also, if you’re planning to retire in the near future, you may want to factor the new amount into your calculations when working out how you’ll generate an income.
As well as an increase in the State Pension amount, there are also upcoming changes to the State Pension Age. From April 2026, the age at which you can access your State Pension will start increasing from 66 to 67.
As a result, if you plan to retire before 67, you might need to use your own savings to fund your lifestyle for a few more years before you can start claiming your State Pension.
2. An increase to the “normal minimum pension age”
In most cases, you can access your private and workplace pensions at age 55. This is your “normal minimum pension age” (NMPA). However, this is set to increase to 57 from April 2028 onwards.
If you plan to retire after 57, and won’t need to access your pensions, this change may not affect you too much. However, if you want to retire before then, or access your savings to achieve certain financial goals, you’ll need to rely on savings from other sources, such as your ISAs.
That’s why it’s important to factor changes to the NMPA into your retirement plans.
3. The Pension Schemes bill
When the new Labour government first came to power, they introduced the Pension Schemes bill, which aimed to improve outcomes for savers.
The bill contained plans for several changes to pensions, including measures to make it easier to find lost savings. Under the proposed rules, small pension pots could automatically be consolidated.
Pension providers will also be required to demonstrate the value for money of the schemes they offer, using a traffic light rating system. The pension regulator may force schemes with a red rating to close, and amber schemes will need to make changes to offer better value to consumers.
Additionally, the government will require pension providers to offer retirement products that generate income.
According to FTAdviser, the government estimates that these changes could lead to a 9% increase in retirement savings for an average earner saving over the course of their career.
This bill is part of a wider push by the government to improve the pension system. The first phase of their pension review was completed in 2024, with the next phase expected to finish in 2025. Once the findings are published, more new pension legislation could be announced.
We can help you respond to any legislative changes as and when they happen, to ensure you’re still on track to achieve your dream retirement.
4. The rollout of the pensions dashboard
The pensions dashboard is an initiative designed to make it easier for savers to manage their retirement pots. You will be able to access information about all your different pensions in one easy-to-manage application.
The government first announced the project in 2016, but it has been delayed several times. Now, there is finally a schedule in place for rolling out the pension dashboard and connecting different schemes.
All pension providers must connect to the dashboard by the 31 October 2026. After this, you may find it easier to keep track of your retirement savings.
5. Changes to rules around pensions and Inheritance Tax
During her October 2024 Budget, chancellor Rachel Reeves suggested changes to the rules around pensions and Inheritance Tax (IHT).
When you pass away, the executor of your will adds up all your taxable assets and any portion of your estate that exceeds a certain threshold may be subject to IHT.
Currently, pensions are exempt from IHT, making them a useful estate planning tool. However, in her Budget, Rachel Reeves suggested that this exemption should end from 6 April 2027 onwards. After this date, it could be more difficult to mitigate IHT when passing wealth to your loved ones.
Fortunately, with our support, you can find ways to potentially reduce the IHT your family pays.
These pension developments could affect your financial plan as you prepare for retirement. We are here to explain any changes and help you adapt, so you can continue working towards your goals.
Get in touch
If you have questions about any of these topics, we can answer them.
Please get in touch or email us at advice@mlifa.co.uk for more information.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning or tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.