We’ve seen some big changes to pensions over the years, but next year could see the foundations laid for some truly huge developments.
The proposed ‘lifetime pension’ will give members more choice in building pension savings on their own terms, while helping combat the issue of lost pension pots.
However, pensions are also known for their drama, and we can expect a bit of that in 2024.
Debate around the cost of State Pension will continue to rage on. It will be interesting to see whether support for the triple lock will be a feature of any key party manifestos.
There’s also a chance that the abolition of the lifetime allowance is reversed if Labour win the next election.
This article isn’t personal advice. If you’re not sure what’s right for your circumstances, ask for financial advice. Pension and tax rules can change, and benefits depend on your circumstances.
What to expect for pensions in 2024
The State Pension will increase
Pensioners will get an 8.5% boost to their State Pension from April 2024.
After a tough year of high prices and squeezed budgets, this inflation-busting increase will be welcomed by many.
However, this is the second large increase in a row. So, debate over how to contain the burgeoning cost of the State Pension will continue with calls to reform the triple lock.
The easiest way to check how much State Pension income you could get is by asking for a State Pension forecast.
The government’s calculator can also help you find out the earliest age you can claim payments.
Goodbye lifetime allowance
The lifetime allowance is due to be abolished from April 2024. This is great news for those with large pension pots.
Its removal sounds easy in practice, but the reality is the industry has to get to grips with a complex set of rules before this can happen.
The other concern is that Labour has said it will reinstate the allowance if they get into government though. However, as we get closer to a general election, many are hoping that this stance could soften.
The lifetime pension will take shape
The lifetime pension took centre stage in the autumn statement. These reforms would allow people the right to ask their employer to pay pension contributions into the pension of their choice.
This could go a long way towards solving the issue of lost pensions and puts the member firmly in control of their own pension planning.
It will, however, take some time to work through and it’s unlikely we’ll see them introduced any time soon.
The good news is you can take steps today to take control of your pensions. Using the Pension Tracing Service to track down lost pensions could leave you much better off in retirement.
You can then make them even easier to manage by bringing them all together into one pension, like a Self-Invested Personal Pension (SIPP) that offers you more options.
Will the extension of auto-enrolment finally happen?
We hoped to see a timetable for the extension of auto-enrolment in the autumn statement, but it was absent.
Lowering the minimum age from 22 to 18 and allowing contributions from the first pound will help more people build bigger pensions, particularly women and people in part-time work.
The bill received Royal Assent in the autumn, but we’ve seen no progress since. Hopefully it’s hovering near the top of the new pension minister’s in-tray for action in the new year.
It will get easier to buy voluntary NI contributions (hopefully!)
Department for Work and Pensions (DWP) phonelines rang red hot all year as people raced to meet the deadline to buy voluntary National Insurance (NI) contributions for gaps going back to 2006.
The resulting chaos prompted the DWP to extend the deadline to April 2025 and to pledge to introduce an online system to reduce call wait times. No date’s been set for its introduction, but it’s expected in spring.