3 changes to Pensions in 2024 and what they might mean for you
If you’ve started the new year wanting to make the most of your pensions, here’s three big changes to keep on your radar.
Whether retirement is a long way off, or it’s just around the corner, getting to grips with your pension sooner rather than later can help stave off pension-dread in the future.
The state pension boooost
From April 2024, State Pensions will increase by 8.5%. The increase will see weekly pension payments reach £221.20, or an extra £902 per year for those who qualify for the full amount.
The basic rate for those who reached state pension age before 2016 will be £169.50 per week, an extra £692 per year.
The rise is thanks to the government’s triple lock commitment, which looks to increase the State Pension for retirees.
Despite inflation falling, costs of living are still increasing, and pensioners who rely on their State Pensions will see this as a huge positive.
Lifetime Allowance retires for good
From April 2024, the lifetime allowance will be hosting its own retirement party, as it is due to be abolished.
This is great news for anyone with a big pension pot.
Previous big pension pots could have seen a tax levy of up to 55% on their pension savings of £1.07 million or higher.
But beware, the scrap doesn’t come without a caveat. Everyone can take a tax-free lump sum of 25% out of their pension pot. However, the maximum amount you can now take out as that tax-free lump sum is £268,275.
Your pension, your way, your pot for life
One of the most exciting announcements to come out of the Autumn 2023 statement was the new “pot for life.”
The new introduction would apply to anyone with an employer who is paying into a pension scheme. You would be able to ask your employer to pay into a pension scheme of your choice, rather than subscribing to your employer’s chosen pension scheme.
Not only is this great for flexibility, but it keeps you in control of where your lifetime savings are being kept.
Although this was announced in the Autumn Budget, it’s likely that this will take several years to come in effect.
In the meantime, you might want to think about hunting down any old pensions you might have lost along the way. If you need help tracking down a pension, you can use Virgin Money’s handy tools. Or the government tracing service.
You could also combine all of your pensions into one pot so all of your pension savings are in one place.
If you’re thinking about transferring your pension to Virgin Money, you can find out more about transferring your pension here.
Different providers will offer different services, and might charge a fee to make a transfer.
Your pension is designed for later life. When you save into a pension, the value of your investment could fall and you could get back less money than you put in. You usually can’t access your pension until age 55 (rising to 57 from 6 April 2028).
This article can give you helpful tips, but it isn’t financial advice. If you’re not sure if something is right for you, you should speak to an Independent Financial Adviser.