Autumn Statement 2023 and how it affects pension saving

On 22 November 2023, Chancellor Jeremy Hunt presented the Autumn Statement.

While very little is changing immediately, there were plenty of announcements about possible changes that might impact pension saving in the future.

So, what pension announcements were made?

Announcements for all schemes

• The government is committed to maintaining the Triple Lock. This means the basic State Pension, new State Pension and Pension Credit will increase by 8.5% in 2024-2025, in line with average earnings growth.
  

  The new full State Pension will increase from £203.85 per week in 2023-24, to £221.20 per week in 2024-25. This is an increase of £17.35 per week, or £902.20 a year, if a pensioner receives 52 weeks of State Pension.

• In the Spring Budget 2023, the government announced plans to bring in legislation to abolish the Lifetime Allowance (LTA). This legislation will be effective from 6 April 2024. Although the LTA is being abolished, the most you will be able to take as a tax-free lump sum will be £268,275. This is equal to one-quarter of the previous LTA.

• To support pension scheme investment into the UK’s most innovative companies, the government is committing £250 million to 2 successful bidders in the Long-term Investment for Technology and Science (LIFTS) initiative, subject to final agreement. The government also confirmed its intention to establish a Growth Fund within the British Business Bank (BBB).
  

• Plans to improve pension trustee skills, capability, and culture will continue. This includes supporting The Pensions Regulator (TPR) to implement a trustee register, and encourage trustee accreditation.

Announcements for defined benefit (DB) schemes

• A public sector consolidator will be established by 2026, aimed at closed DB schemes that are unattractive to commercial providers.

  The government feels the Pension Protection Fund (PPF) would be well placed to run such a scheme, and will launch a consultation to consider the design and eligibility for such a consolidator.

Announcements for defined contribution (DC) schemes

• A call for evidence will be launched on the possibility of a move towards savers having 1 pension ‘pot for life’. The ‘pot for life’ would allow savers to choose an existing pension scheme that employers have to contribute to.
  
• A framework will be introduced to allow pension pots under £1,000 to be moved into one of a small number of authorised schemes. This will help savers to consolidate their pension pots, rather than having lots of small pension pots.
  
• The government intends to go ahead with proposals discussed in July 2023, for DC scheme trustees to offer decumulation services, and products when members access their DC funds. Decumulation is when pension savings are converted into retirement income. The government will bring legislation in for this at the earliest opportunity.