Major changes to pensions are set to come in and an expert has issued guidance
15:23, 21 Jul 2026Updated 15:24, 21 Jul 2026
Prime Minister Andy Burnham(Image: Getty)
Pension savers have been issued a word of warning as Andy Burnham takes up the reins at 10 Downing Street. Speculation is rife about what policies he will change and bring in, as the new Government has already set out a major fiscal policy.
Ministers have announced a VAT cut on electricity bills, to come in from October. People planning for their retirement may wonder what plans Mr Burnham has for pensions policy, such as the state pension or new taxes.
But experts at wealth firm Rathbones have urged caution in this area. Charlotte Kennedy, chartered financial planner with the group, said: “The key message for savers is not to make major financial decisions based on speculation alone.”
‘Acting prematurely’
She pointed to a previous case of people jumping the gun, saying: “We saw this ahead of the last Budget, when rumours of changes to pension tax-free cash prompted unnecessary concern, only for those measures never to materialise. Acting prematurely on unconfirmed policy proposals can derail carefully constructed financial plans.”
Leading up to the Autumn Budget, there were concerns then Chancellor Rachel Reeves could change the 25 per cent lump sum rules. Under this measure, you can take out up to 25 per cent of your pension pot tax-free, or up to the total tax-free cash you can withdraw across all your pensions during your lifetime at £268,275.
Mr Burnham has appointed John Healey as his Chancellor. The top financial minister has said he will stick to Labour’s manifesto. This could be good news for state pensioners as this included a commitment to the triple lock.
‘Wider efforts’
Under the triple lock, state pension payments go up each April in line with the highest of three numbers. Payments rise by either a minimum 2.5 per cent, the rise in average earnings or inflation. Speaking more broadly, Ms Kennedy said: “While discussions around the state pension tend to dominate headlines, wider efforts to improve retirement outcomes and encourage long-term investment are unlikely to disappear simply because there is a change in political leadership.
“Many of these reforms address structural challenges that extend beyond the lifespan of any single Government.” One change on the cards here is the expansion of auto enrolment.
Pension changes coming in
The legislation has been approved for these changes but has yet to actually be implemented. Auto enrolment ensures that workers are paying into a workplace pension scheme, as employers have to provide a pension where a minimum of 8 per cent of their salary is paid in.
This is often made up of a 5 per cent contribution from the employee with a 3 per cent matched amount from the employer. Currently, you have to be aged at least 22 and have a salary of at least £10,000 for auto enrolment to apply.
But with the changes, this will be expanded to anyone aged 18 and over, and for any amount of income. There have also been calls from some advocacy groups for the 8 per cent minimum to move up as well.