What’s New With UK Pensions in 2025?
The UK pension system is going through some important changes this year, and they could have a big impact on how you save, retire, and even pass on your wealth. Here’s a breakdown of what’s happening in 2025 — and what’s coming soon.
📈 State Pension rise
From April 2025, the State Pension rose by 4.1% under the triple lock, taking the full new rate to £230.25 per week. It’s a welcome boost, but most people will still need workplace or private pensions to enjoy a comfortable retirement.
🏦 Pensions & Inheritance Tax (from 2027)
One of the biggest upcoming shifts is that pensions will be brought into inheritance tax rules from April 2027. Until now, pension pots have often been passed on free of IHT, but in the future they’ll likely be included in the estate and taxed at up to 40%.
👉 If you’re using pensions as part of your estate planning, now’s the time to seek advice.
📜 Pension Schemes Bill 2025
This year’s Pension Schemes Bill is reshaping the landscape for both defined benefit (DB) and defined contribution (DC) pensions.
Trustees will have new powers to manage and use surpluses.
Pension funds will have greater freedom to invest in assets like infrastructure and private markets.
The aim is to create a pension system that is simpler, stronger, and more flexible.
🛟 Pension Protection Fund levy suspended
For 2025/26, the PPF has suspended its levy — saving DB pension schemes around £45 million in contributions. While this doesn’t affect individuals directly, it’s good news for the financial health of schemes.
⏳ Retirement factors changing from October
From 1 October 2025, many schemes will change how they calculate lump sums versus ongoing income.
Lump sums could shrink compared to previous calculations.
Ongoing pension payments may look more generous, particularly if you delay retirement.
👉 If you’re thinking of retiring soon, it’s worth checking your figures before and after October.
📊 Investing more in the UK & private markets
There’s growing pressure on pension funds to invest more in UK companies and private assets. Some schemes are already shifting their default funds to hold more in private equity, infrastructure, and UK-listed shares. The hope is to boost long-term returns and support UK growth, but it also comes with higher risk and less liquidity.
🔮 State Pension age review
The government has launched another review of the State Pension age. The current rise from 66 to 67 is still planned, but further increases could be brought forward depending on life expectancy and cost pressures.
✅ Top 3 Actions to Take Now
Review your pension statements – check where your pension is invested, and whether it matches your risk appetite and retirement goals.
Plan for tax changes – if you have a large pension pot, factor in the 2027 inheritance tax rules when making estate plans.
Get advice before retiring – especially if you’re close to October 2025, as new retirement factors may affect the lump sum you can take.
💼 How JSB Accountants Can Help
Navigating pensions and tax changes can be complex. Whether you’re planning retirement, reviewing your investments, or preparing for inheritance tax changes, JSB Accountants can provide tailored advice to help you make the right decisions for your future.
📞 Contact JSB Accountants today to discuss your pension and retirement strategy and ensure you’re fully prepared for the changes ahead.
As a family-run company, we pride ourselves on providing a bespoke service tailored to your particular needs.
Above all, our objective is to save you time, money and effort in managing your accounts, leaving you free to focus on building your business.
Remember, you’re not alone, we’re always here to help if you have an accounts problem or query
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