How the Chancellor’s Autumn Statement impacts pensions

On 22 November 2023, Chancellor Jeremy Hunt delivered his Autumn Statement, setting out the Government’s key commitments and objectives for the UK economy. In this short article we summarise what he included that impacts pensions.

“Pots for life” proposal.

It’s now common for people to have several pension arrangements, each related to a separate period of employment. The Chancellor announced he would start a consultation on the idea of “pots for life” for defined contribution pension savers – a solution where an individual would have the right to ask their employer to pay into an arrangement other than the company’s pension scheme.

Whilst a similar system is already in operation in Australia, this is likely to cause complications for employers and there is a concern around whether such arrangements can provide a similar level of value for money as company pension schemes.

In the interim, those who find themselves with several defined contribution pension pots, may wish to consider consolidating these by transferring them all into one arrangement. If this is something you’re considering, we’d recommend talking to an Independent Financial Adviser^*.

If you have returned to M&G, having previously worked for the Company, you may have more than one Personal Account. If this is the case, why not talk to the DC Section Administrator about combining these.

^*To provide advice on transferring your pension, an Independent Financial Adviser (IFA) must be authorised to do so by the Financial Conduct Authority (FCA). You can check if the IFA you are dealing with is appropriately authorised by visiting the FCA website.

National Insurance contributions reduced.

The Chancellor also announced a reduction in National Insurance Contributions (NIC) from January 2024 – bringing the main rate employees pay NIC from 12% to 10%.

The Company will match the contributions you pay into your Personal Account (up to a maximum of 5% of your Pensionable Pay) in addition to the 8% of Pensionable Pay it pays automatically on your behalf. If you’re paying less than 5% of your Pensionable Pay into your Personal Account, now may be the time to start paying in a little more. Take a look at our Contribution Calculator to see how much more you could be saving each month.

Triple lock confirmed for the State Pension.

The State Pension is increased each year by an amount determined by either the rate of inflation, the annual rise in national average earnings, or 2.5%, whichever is the highest – the triple lock. In his Autumn Statement the Chancellor confirmed that the triple lock will again be applied to increase the State Pension. This means, if inflation continues to fall, it will receive an inflation busting increase in April.