{"id":199932,"date":"2025-12-24T15:56:09","date_gmt":"2025-12-24T15:56:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/199932\/"},"modified":"2025-12-24T15:56:09","modified_gmt":"2025-12-24T15:56:09","slug":"all-the-ways-pensions-are-about-to-change-and-how-they-will-affect-you","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/199932\/","title":{"rendered":"All the ways pensions are about to change and how they will affect you"},"content":{"rendered":"

\n\t\t\t\t\tThere are a number of upcoming changes to pensions over the next few years. Here’s what you need to know\t\t\t\t\t <\/p>\n

A number of changes to pensions were announced this year<\/a>, with everything from salary sacrifice schemes to the state pension age set to be affected.<\/p>\n

The announcements\u00a0have been peppered throughout the year, including in Labour\u2019s November Budget, with experts encouraging people to take note of what might impact them. <\/p>\n

Maike Currie, VP of personal finance at PensionBee, said: \u201cThe reality is that pensions now demand close attention: reviewing plans, checking contribution limits, and planning for both retirement and estate outcomes is no longer optional, it\u2019s essential.<\/p>\n

\u201cWith all of these transitions, savers must revisit their pensions and get under the bonnet of how policy changes affect their plans.\u201d<\/a><\/p>\n

Below, we revisit the key announcements and how they affect your pension.<\/a><\/p>\n

New FeatureIn ShortQuick Stories. Same trusted journalism.<\/p>\n

Review of state pension age<\/p>\n

In the summer, Labour launched a review of the state pension age. It is currently 66 and due to rise to 67 soon before increasing to 68 between 2044 and 2046.<\/p>\n

The review will determine whether this timeline needs to be accelerated amid concerns that the state pension will not be adequate, without a private pension, for retirement.<\/p>\n

These fears were intensified after it was revealed that upcoming increases to the state pension amount will pull many into the income tax net from 2027. <\/p>\n

However, after the Budget, the Chancellor confirmed that those on the state pension alone will not have to pay income tax on it \u2013 although this does not apply to those who have deferred the payments.<\/p>\n

Triple lock confirmation<\/p>\n

The government has reaffirmed its commitment to the triple lock, meaning the state pension will increase by around 4.8 per cent in April 2026. <\/p>\n

The triple lock ensures the state pension<\/a> increases each year in light with the highest of average earnings, inflation or 2.5 per cent.<\/p>\n

Labour has committed to honouring the triple lock until at least 2029. <\/p>\n

It means the full new state pension should increase from \u00a3230.25 per week to \u00a3241.30 per week in April 2026. This is a rise of \u00a3574.60 a year to \u00a312,547.60.<\/p>\n

The full basic state pension should increase from \u00a3176.45 per week to \u00a3184.90 per week \u2013 or \u00a39,614.80 annually.<\/p>\n

Although a boost for pensioners, there are concerns about the longevity of the lock. <\/p>\n

Ms Currie said: \u201cThe debate about the sustainability of the triple lock and intergenerational fairness remains.\u201d<\/p>\n

Salary sacrifice changes<\/p>\n

Pension salary sacrifice is where someone agrees with their employer that they will exchange \u2013 or \u201csacrifice\u201d \u2013 some of their salary or bonus, and the employer will instead pay that amount into their pension as an employer contribution alongside other employer contributions.<\/p>\n

The employee saves money because they don\u2019t have to pay any NICs on the money exchanged, unlike if they had received it as a salary. Employees pay 8 per cent NI on income between \u00a312,570 and \u00a350,270, and 2 per cent NI on anything over \u00a350,270.<\/p>\n

The employer saves money because they don\u2019t have to pay NIs on the new employer contribution, whereas they would have had to pay 15 per cent NI on the salary. Sometimes employers offer to share some or all of these NI savings with their employees, meaning an even bigger pension contribution.<\/p>\n

However, the Chancellor announced these benefits were going to be curtailed in the Budget. Only up to \u00a32,000 of salary or bonus exchanged will continue to receive these NI perks.<\/p>\n

Anything over \u00a32,000 will be subject to NICs paid by both the employer and the employee.<\/p>\n

As this change isn\u2019t due until 2029, there is still time to make the most of the current system.<\/p>\n

Upcoming changes to inheritance tax<\/p>\n

Under new rules confirmed in the Budget, the nil\u2011rate band of \u00a3325,000 \u2013 the threshold up to which an estate is not subject to IHT \u2013 and the residence nil\u2011rate band of \u00a3175,000 will remain frozen until at least 5 April 2031 \u2013 a move expected to raise a record \u00a314.5bn.<\/p>\n

Any part of the estate above the nil-rate band threshold is generally taxed at 40 per cent.<\/p>\n

That means that the amount a person can leave tax-free hasn\u2019t budged since 2009, even though house prices, savings and pensions have continued to grow.<\/p>\n

People who want to avoid being pulled into this net could look at the gifting rules, where people can give away their money without having to pay tax. <\/p>\n

Tax rules allow you to gift up to \u00a33,000 each tax year, exempt from IHT. You can also give small gifts of up to \u00a3250 each (although these small gifts cannot be given to people who receive all or part of the \u00a33,000 gift).<\/p>\n

Alternatively, you can make a gift of unlimited value to someone, which will escape IHT if the giver of the gift survives for another seven years (the \u201cseven-year\u201d rule).<\/p>\n

Small pension pot consolidator<\/p>\n

Pension providers and schemes must connect to the pensions<\/a> dashboard by 31 October 2026. It is hoped this will help people find their smaller pension pots and consolidate them, in an efforts to boost the value of retirement pots.<\/p>\n

There are now an estimated 3.3mn lost pots, containing \u00a331.1bn worth of assets.<\/p>\n

For those who think they may have a lost pot, there are free services available that can help you find them.<\/p>\n

The government\u2019s pension tracing service is a huge database of pension scheme contact details. Savers can enter the names of previous companies they have worked for and the dates of their employment to find out the name of the pension provider, and then contact the firm to see whether they have a pension.<\/p>\n

After finding a lost pension, the easiest option is usually to move it into the scheme where you are currently saving.<\/p>\n

Not only does this make it easier to keep track of your savings, as they are all in one place, but newer pension schemes typically have lower fees. Fees eat into your investment returns, so keeping them low can help to boost the value of your pot over the long-term.<\/p>\n

More investment in private assets<\/p>\n

Where your workplace pension is invested might alter in the next four years\u2019 time due to something called the Mansion House Accord.<\/p>\n

This is a voluntary agreement between 17 of the UK\u2019s largest pension schemes to allocate 10 per cent of their default funds into private markets by 2030, with half of this weighted to the UK.<\/p>\n

Private assets refer to companies that don\u2019t trade publicly, encompassing sectors such as infrastructure and private equity.<\/p>\n

The aim is to direct more pension scheme money into UK-listed stocks to boost the domestic economy and improve saver returns.<\/p>\n

However, the move hasn\u2019t escaped criticism, with concerns that the increased volatility of investing in private assets offers no guarantee of better performance. <\/p>\n

The government in the summer produced calculations to illustrate the enhanced growth potential, and the numbers were far from compelling.<\/p>\n","protected":false},"excerpt":{"rendered":"There are a number of upcoming changes to pensions over the next few years. Here’s what you need…\n","protected":false},"author":2,"featured_media":199933,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,111,139,69,12613,244,245,294,3452],"class_list":{"0":"post-199932","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz","13":"tag-pensions","14":"tag-personal-finance","15":"tag-personalfinance","16":"tag-retirement","17":"tag-state-pension"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/199932","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=199932"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/199932\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/199933"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=199932"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=199932"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=199932"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}