2024 UK Pension Update

The UK General Election is to be held on Thursday 4th July, and as always the issue of pensions will be a key factor for many voters. However, there have already been a number of important changes brought in this year that you should be aware of.

So what’s happened with pensions this year, and what can you expect—depending on the outcome—following the General Election?

What changes have been made to UK pensions in 2024?

There have been four key changes that have been made to UK pensions already in 2024:

The UK state pension has increased

Thanks to a strong increase in wage growth in the previous fiscal year, state pensions were boosted by 8.5% in April. The triple lock guarantees that state pensions rise in line with inflation, average earnings growth or 2.5%—whichever is higher—and in 2024 this means that the full new state pension is at £221.20 a week, up from £203.85 a week in 2023. At the same time, the full basic state pension has risen to £169.50 a week, up from £156.20.

Pension credit has risen

If you’re over 66-years old (the current state pension age) and earn less than £218.15 a week, you’ll be eligible for pension credit. If you’re in a couple, the combined income figure is £332.95. Pension credit works by topping your income up to those minimum amounts.

This represents an increase of £17.10 per week for individuals, and £26.10 for couples—also an 8.5% increase.

Pension Lifetime Allowance has been abolished

The Pension Lifetime Allowance—the total amount an individual can save into pensions during their lifetime before having to pay tax—was abolished by chancellor Jeremy Hunt.

The Lifetime Allowance had previously applied to pensioners that had saved over £1,073,100, but from 2024 it is no longer in effect. Note that there is still a cap of £268,275 on the tax-free lump sum you can take from your pension.

Online state pension top-up system to go live

A new online system that will make it easier to check the health of your state pension and pay missing National Insurance credits is expected to go live in the coming months, and won’t be impacted by the result of the election.

Currently, the process for checking your NI contributions and buying more of them is time-consuming and complex, and the new system is designed to make it much faster and easier.

What might happen to pensions after the General Election?

The four changes we’ve highlighted above are not going to be impacted by the General Election next month, but what are the major parties claiming they’ll implement for pensions should they take office?

Abolition of the Lifetime Pension Allowance won’t be reversed

When Jeremy Hunt first announced the abolition of the Pension Lifetime Allowance in last year’s spring budget, Labour had promised to reinstate it should Rachel Reeves move into Number 11 following the General Election.

However, on 10th June it was announced that Labour had dropped the plan to reintroduce the cap.

The pension ‘Triple Lock’ will be maintained

There are no signs from any of the major parties that the ‘triple lock’ guarantee for pensions—where the state pension rises in-line with inflation (measured by the Consumer Price Index), average earnings or 2.5%, whichever is higher—will be scrapped, meaning current and soon-to-be pensioners can be rest assured their state pension amount won’t fall in real terms during the next parliament.

How we can ensure you’re managing your pension in the best way

The health of your pension pots is essential for ensuring you can enjoy your retirement, but they can be difficult and confusing to manage. After all, they’re something you’re paying into throughout the decades of your working life.

Here at Warr & Co we have exceptional experience in ensuring your affairs are managed in the most tax-efficient way possible. To find out more about our pension planning services why not book your free, no-obligation pension planning consultation today? We’ll take the time to fully understand your situation and provide clear guidance on what you should do next.