Pension Changes Round Up
The new financial year which begins in April often brings about changes which can affect pensions. The below gives a breakdown of what is changing for 2024/25.
Pension Increase
Pensions are increased each April to keep up with the cost of living. This year pensions will increase by 6.7%.
This increase is applied to everyone – those receiving their pension, those whose pension savings are yet to be paid out, and members who are still saving into their pension.
The increase is based on the Consumer Price Index (CPI) from the previous September and is set by law. Full details on the Pensions Increase can be found on our Pensions Increase page.
State Pension Increase
The basic State Pension will increase by 8.5%. This is higher than the Fund’s pension increase because of the ‘triple lock’. The triple lock means that the Government must increase the state pension by whichever of the following is highest:
- Wage growth, or
- Inflation, or
- 2.5%
Wage growth was highest, even more so than inflation which is used for our pensions increase, meaning the State Pension increases in line with wage growth this year.
Contributions
For members paying into their pension, contribution rates have changed following the Government’s yearly review. Your contribution rate is simply a percentage of your pay that goes into your pension, and ultimately how much you pay in depends on how much you earn. You can use our Contribution Rate calculator to see what your rate is.
If you pay more into your pension via Additional Pension Contributions (APCs), the maximum amount of APCs you can purchase has now increased to £ £8,030. More information on APCs can be found here.
Tax
Whilst you don’t pay tax on your pension contributions, there is a tax limit on savings.
Annual Allowance is the amount you and your employer can pay into your pension in a year before you incur a tax charge. Annual Allowance remains at £60,000 for 2024/25, while higher earners (those with taxable income of £260,000+) continue to have a reduced or tapered Annual Allowance. More information can be found on our Tax page.
These are the main financial changes which are applicable to pensions. Some or all of the changes may affect you depending on your circumstances but if you have any concerns or queries you can contact us.
