A RAFT of changes to pensions were announced by the Chancellor in his Autumn Statement.
Here, we explain the new measures revealed in Jeremy Hunt’s speech and documents published afterwards, and what they mean for you and your money.
1
The Autumn Statement provides an update on the government’s plans for the economy, such as tax and spending changes.
In his speech today, some of the biggest changes Jeremy Hunt announced included:
Pensions were a big feature in the statement and the announcements provided much-needed relief for cash-strapped retirees.
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Below are some of the biggest changes to pensions announced by Mr Hunt and what they mean for savers.
State pension to rise in line with earnings
Millions of pensioners are set for a bumper rise of £901 to their state pension payments next year.
This is because Chancellor Jeremy Hunt confirmed in his Autumn Statement that the pensions triple lock will remain intact.
The triple lock is a measure which increases the state pension in line with whichever is highest of: September’s inflation figures, wages for May to July, or 2.5%.
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Next April, payments will rise in line with earnings, increasing by 8.5%.
This means pensioners could get a weekly rise of £17.35 from £203.85 to £221.20 – equivalent to £901 a year.
Mr Hunt said in his Autumn Statement speech: “That is one of the largest ever cash increases to the state pension – showing a Conservative government will always back our pensioners.”
The news comes as a huge relief to pensioners following rumours that the government would opt to increase payments by the lower wages figure of 7.8% (not including bonuses and one-off payments) instead.
Around 1.2million pensioners are largely dependent on the state pension for their income, according to analysis of ONS data by Just Retirement Group.
Last year, the state pension rose by 10.1% as it increased in line with 2022’s September inflation rate.
Workers to choose where pension is paid
The Chancellor has announced plans to consult on a “pot for life” scheme where savers would have the right to choose the pension scheme they are automatically enrolled into.
This would allow workers to nominate which scheme their pension contributions, as well as their employer’s contributions, go into.
Mr Hunt said: “I will consult on giving savers a legal right to require a new employer to pay pension contributions into their existing pension pot if they choose, meaning people can move to having one pension pot for life.”
Currently, companies are obliged to sign up staff to their own pension plans chosen by them.
But this has led to workers often having many different pensions as they switch jobs, which has resulted in some pots getting “lost”.
Official figures show around £27billion is sitting in lost pension pots.
Having a single pension pot system has been adopted by countries including Australia.
Daniel Harrison, chief executive of wealth firm True Potential, explained: “Too many people have lost track of pension pots or have little to no control over where their hard-earned money is invested.
“A pot for life could simplify pensions and give millions of Brits financial control over their future.”
Pension firms may have to offer plans for retirees’ cash
The government confirmed plans to make pension firms responsible for supporting retirees on what to do with the cash in their pensions once they start withdrawing from it.
Currently, pension firms which manage workers’ savings aren’t obliged to offer services to savers who are drawing on their pension income.
But under new plans, the people who manage those schemes would have to offer plans at a competitive price to help customers get more out of their retirement funds.
Steven Cameron, pensions director at Aegon UK, explained: “Currently, many schemes don’t offer their members support or access to ‘income drawdown’, which allows individuals to keep their pension invested while taking income.
“But the Department for Work and Pensions is consulting on granting members of certain pensions a wider range of choices around how to take their income in retirement”
The government hasn’t announced all the details yet but will share more information in the near future.
It will have have to consult with the companies involved before it makes any final decisions.
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