All the pension changes coming in 2025 – and they will affect you even if you’ve not retired yet
There are key pension changes due to kick in from 2025 – and they will likely affect you even if you're not close to retirement age just yet.
The state pension will rise in April but many pensioners are at risk of paying tax for the first time on their retirement cash. There is also a major deadline coming up where you need to check if you have enough National Insurance contributions, or risk not having enough state pension in retirement.
Meanwhile, the first firms will connect to the pensions dashboard and millions could get more support with their retirement funds going forward. But in not-so-good news, a review that was expected to implement changes to auto-enrolment have been delayed indefinitely.
DWP payment dates changing for people claiming state pension, PIP and Universal Credit
'Extraordinarily rare' collection of coins sells for £1.1million at auction
State pension to rise
The state pension is due to rise by 4.1% next April under the triple lock promise. The triple lock guarantees the state pension rises each April by the highest out of inflation (using the previous September inflation figure), wages (average growth between May and July) or 2.5% – whichever is highest. Wage growth will be used to determine the state pension increase. It means the full new state pension will rise from £221.20 to £230.30 a week, while the full basic state pension will go up from £169.50 to £176.45 a week.
National Insurance deadline to boost state pension
There is a big deadline coming up for purchasing missing National Insurance years. Most people need 35 qualifying years on their National Insurance record to claim the full new state pension, and ten years to receive anything at all. This means if you have gaps in your record, you may not receive a full new state pension later in life. At the moment, you can purchase missing years dating back to 2006 – but after April 6 next year, you'll only be able to go back six tax years.
First firms connect to pensions dashboard
The first pension providers will begin connecting to the long-awaited pensions dashboard from April 30 next year. All pension schemes have to connect by October 31, 2026 at the latest. The pensions dashboard will allow people to see all their pensions in one place through the Money and Pensions Service – this means you'll be less likely to lose track of smaller retirement pots.
Millions could get more support with their pensions
The Financial Conduct Authority (FCA) has set out new proposals that would see financial firms offer free bespoke advice to pension savers. The idea would be that savers are given more help to increase their retirement savings. Currently, you have to pay a fee for tailored advice. The FCA is seeking views on its proposals by mid-February 2025 and expects to consult in summer 2025 on the rules that would create a new framework.
New 'modernised' pension scheme could be rolled out
A new type of workplace pension known as Collective Defined Contribution (CDC) could soon be expanded. CDC pension schemes would be an alternative to defined benefit (DB) and defined contribution (DC) workplace schemes. It would see employer and member contributions pooled together into a collective fund and then invested. Royal Mail became the first company to launch one this year, and the Government launched a consultation on how rolling it out more widely could impact pension savers. It plans to introduce legislation in 2025.
What is happening to pension auto-enrolment changes?
We still don't know what is happening with proposed changes to pension auto-enrolment rules. Pension auto-enrolment sees you automatically placed into your employer’s workplace pension, unless you choose to opt out. Under current rules, you are auto-enrolled when you are aged 22 and older and you earn above £10,000. This is due to be lowered to 18, which means workers will be encouraged to start saving for their retirement from a much younger age.
The lower earnings limit – the minimum level of earnings on which you and your employer have to pay contributions – is also being abolished. The limit is currently set at £6,240. However, it has been confirmed that a major review into pensions adequacy has now been delayed indefinitely. The Government previously said these changes would be brought in by the mid-2020s.
Shop affordable alternative to Kate Middleton’s ‘most worn’ earrings worth £450 for £95
