Long-awaited pension dashboard expected next year

Pension dashboards, which are designed to make it easier for people to decide where their pension is best placed, are expected to be released next year along with league tables for pensions. The aim is to allow pension savers to see how their workplace pension schemes compare to other pension providers in the marketplace.

The pension dashboard has been discussed for years, by everyone from the government to scheme providers and financial advisers. But the FCA and the TPR are consulting on a new ‘Value for Money’ framework for workplace pensions, and assessments are due to be published from 2028.

Savers will be able to compare providers, including workplace pensions, based on charges, returns, and quality of service once the dashboards are fully set up. It will help people to get the best value for money for their pension contributions by checking their provider against the league table.

What benefits will people see?

The aim of the pension dashboard has always been to create an easier way of comparing pension providers for the general public. Pensions at their simplest are tax-efficient savings vehicles – you put in £80 as a basic rate taxpayer and the government gives you tax relief of £20 to make your contribution up to £100. Higher rate and additional rate taxpayers would pay £60 and £55 respectively, and get £40 and £45 respectively in tax relief to make up a £100 contribution.

Rachel Vahey, head of public policy at AJ Bell, said: “The Government has set out an ambitious programme of reforms that has the potential to transform workplace pensions, making it easier for people to compare pensions and switch to get a better deal.

“Pension savers deserve to know how well their pension scheme is performing. ‘Traffic lights’ league tables must be easy to understand and help people make more informed decisions about their retirement savings, rather than burying them in technical language or complex metrics.”

What will I be able to see through the pension dashboard?

You will be able to see all the details of all your pension plans in one place once the dashboard is launched. This will include both state and private pensions, and which pension scheme provider your pension is with. You will see contact details, and the current value of the pension, along with a prediction of what it could generate for you in income once you reach retirement age, according to AJ Bell.

The first incarnation of the dashboard will be accessed through MoneyHelper, which is run by the Money and Pensions Service (MaPS). But it’s expected that other companies, such as pension providers, banks or your employer, will all offer a pension dashboard eventually. The MaPS dashboard is expected to be available to the public in financial year 2027/28.

Ms Vahey said: “Greater transparency should empower people to take control of their retirement planning. Whether that means increasing contributions, reviewing their investment strategy or consolidating pension pots with a provider that better meets their needs for better information, service, price, or wider investment choice, giving them more opportunity to improve their long-term retirement outcomes.”

What else can we expect?

Aside from the impending launch of the pension dashboard, and the league table of pension funds, the Government has also set out a ‘roadmap’ timetable for workplace pensions reform. This includes aiming to create 20 defined contribution ‘megafunds’. A defined contribution pension is a pension where what you eventually receive depends on what you put in and how that money has grown over time.

It has also suggested other reforms, such as the consolidation of dormant small pension pots, and introducing a series of default retirement options for workers saving into their workplace pension. These so-called ‘guided retirement’ options, which are due to start from 2029, could include pension income solutions such as a combination of annuity and drawdown, or a collective solution, designed by pension trustees and providers. You wouldn’t have to accept these options, you could be offered other solutions, or even transfer your pension elsewhere if you prefer.

Larger workplace pension schemes will have to publish Value for Money assessments from 2028, leaving them competing to show how well their scheme is performing. This is based on cost, investment returns, and how good the scheme’s administrative support is. They will be scored from red to green in a traffic light system, which goes from poor value, to outperforming on value. The worst performers will be expected to improve, or close.

Other changes to workplace pensions include the scale provisions, which require “all defined contribution multi-employer schemes which are used for automatic enrolment to have assets of at least £25 billion in a single main default arrangement”, said Ms Vahey.

She added: “This will mean that some pension savers are moved to different pension schemes, as their workplace pensions go through a transitional period.

“Combined with pensions dashboards, these reforms have the potential to create a new generation of more engaged savers. For the first time, people will be able to see what pension savings they have built up across different providers, alongside clearer information about how well those pensions are delivering for them.”

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If you would like to find out more about how the pension dashboard and other changes will affect you or your business, then please get in touch with us and we will explain what you need to know.

Pensions come under Inheritance Tax rules from April 2027

Pensions are set to be drawn into the Inheritance Tax (IHT) net from April 2027, in a major change to the current rules, which means you need to know what to expect so you can prepare accordingly.

Currently, you can pass your pension onto your beneficiaries in its entirety without it being caught in the IHT net as part of your overall estate on death. But from April next year, this is set to change, and your pension may be subject to IHT if the value of your estate is high enough. The beneficiary who receives your pension may also face an income tax charge on any income they draw from it.

Pensions passed directly to spouses or civil partners will continue to be free of IHT. But any other beneficiary may face IHT on the pension that is passed on when you die, depending on the value of your estate.

What changes can we expect if passing on a pension fund?

The biggest change is that any pension passed onto a beneficiary other than a spouse or civil partner may be subject to IHT at 40% if the total value of your estate breaches the IHT threshold. This is currently made up of a nil rate band of £325,000, with an additional £175,000 residence nil rate band, which can be applied if you pass your home on to direct descendants. This means you have up to £500,000 each, if you have children that you can pass your family home onto.

If one spouse or civil partner dies before the other, and doesn’t use all their IHT allowances, then the surviving spouse or civil partner can use the remaining amount. This gives a total of up to £1m before IHT is applied, depending on the remaining allowance available.

Once these limits are exceeded, any amount above this level is subject to IHT at 40%. Given the average UK house price in January 2026 was £300,077, according to data from Halifax, and that the pension pot will be included in the estate from April 2027 onwards, it will be easier to breach. This means more estates are likely to be affected.

What happens to any death-in-service benefits?

Death-in-service benefits – which are paid from the pension scheme if you die while still working – will be outside of IHT. But any other death benefits paid, such as a lump sum from the pension fund, or any remaining pension to be passed on, will generally be included in the estate for IHT.

If you die before you reach 75, then anyone who you pass your remaining pension pot to, can usually draw money from the pension without income tax, but it may still be subject to IHT, unless it is passed directly to a spouse or civil partner or your overall estate is below the threshold.

If you die after age 75, then as well as IHT, any income drawn from the pension by the beneficiary will also be subject to income tax. If it is passed to your spouse or civil partner, it won’t be subject to IHT, but he or she will still pay income tax on withdrawals in this case.

How can you reduce the impact of rule changes next year?

The best way to reduce the impact of these changes when you’re passing on your pension fund, could be to start drawing down more of your pension and ‘gifting’ money to those you want to receive it. But there are rules you need to consider before you do this.

For example, you are allowed to make regular gifts of any amount of money to someone, providing it doesn’t affect your standard of living. You can also make a larger, one-off gift, but you must survive the gift by seven years for it to be fully outside of the IHT net. This is known as a Potentially Exempt Transfer. Taper relief may reduce the IHT payable if the death occurs between three and seven years after the gift is made, until it is excluded from IHT entirely.

You can also gift up to £3,000 a year in total without it being subject to IHT, even if your estate exceeds the threshold on death. If you missed gifting £3,000 in one year, you could double up in the next year. But this allowance can only be carried forward for one year.

Outside of this, you can gift up to £250 per person per year to as many people as you want, but you can’t combine this with the £3,000 gift. If you have a child getting married, you can gift up to £5,000 without the spectre of IHT, or £2,500 for a grandchild, or £1,000 to anyone else.

These rules can be helpful, but you should only do this if you are able to live comfortably on the income you have remaining from your pension, or from other sources. It is always best to take advice before you make any of these decisions, to ensure you’re doing the right thing and not breaching any rules or creating problems for those left behind.

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If you would like to find out how these rules may affect you from next year, and how to deal with them effectively, then please get in touch with us and we will explain what you need to know.

“Decisive action” needed for a UK pension regime fit for the next generation

Pension reforms proposed by the Institute for Fiscal Studies (IFS) in partnership with the abrdn Financial Fairness Trust aim to help move the UK’s pension system towards one fit for future generations. The proposals have been released ahead of the Government’s own review of retirement inadequacy.

The reforms outlined in the IFS report, The Pensions Review: final recommendations, would provide a secure State Pension, increase the number of workers saving into private pensions, help those hit hardest by the rises in State Pension age, and help people to manage their pension wealth throughout their retirement.

The IFS highlighted serious problems which remain for the next generation of pensioners, despite significant improvements in recent years. These are largely the result of most workers no longer saving into defined benefit pension schemes, which pay a specific amount at retirement based on the wage you were earning when you retired, along with lower levels of home ownership. The review identified several issues that need addressing:

• Pressure on public finances from an ageing population.
• Many workers failing to save enough to have an adequate income through retirement – including most of the self-employed.
• Complex decisions over how to draw on and manage pensions through retirement.
• Increasing numbers of older people living in more expensive, insecure, private rented accommodation.

What are the recommendations?

There are various recommendations to make the necessary changes to the UK’s pension system, and they would work across the entire landscape. One of the key measures is a four-point State Pension guarantee.

The first would be to target a level of the new State Pension “as a fraction of economy-wide average earnings”. For example, the current pension is worth 30% of average full-time earnings. Once the target level is reached by using the existing ‘triple lock’, then the IFS recommends the State Pension should rise in line with average earnings growth.

The second is that the State Pension should always grow as fast as inflation, if earnings growth is below it. The IFS report stated: “This would temporarily cause the state pension to be above target. As is done in Australia, the state pension would then continue to rise in line with inflation until it returns to target.”

The third is that the Government should commit to never means-testing the State Pension, while the fourth is that the State Pension age should only rise as longevity at older ages rises.

What about private pensions?

Private pension savings are currently not sufficient for most people to reach a retirement that they will enjoy comfortably. In fact, 20% of private sector employees and 80% of self-employed workers are not saving into a private pension at all.

Even those who are saving will usually be saving into a defined contribution pension, with around 40% set to miss the standard benchmark for retirement income as the amount they will receive is based entirely on the investment performance of the pension fund. Also, many people are struggling on lower incomes so the IFS recommends avoiding the default automatic enrolment into a pension as it would mean those people have less money to take home.

Instead, it recommends removing the requirement for any employee aged 16-74 having to make contributions to their pension to receive employer contributions. The suggestion is that an employer pays at least 3% of their salary as a pension contribution, regardless of whether the employee also pays into the scheme.

To ensure those on lower earnings don’t lose too much of their monthly income, the IFS also proposes increasing the minimum default total pension contributions under automatic enrolment. It also recommends integrating pension contributions into Self-Assessment tax returns to help boost pension savings by the self-employed.

The report stated: “The proposals boosting pension contributions from employers and employees would generate an additional £11 billion per year of private pension saving (£5 billion from employer contributions and £6 billion from employee contributions). Those on course for low-to-middle retirement incomes would see the biggest boost to their incomes – by an average of 13–14% – from these reforms.”

There are further measures suggested in the report, which can be read in full on the IFS website: The Pensions Review: final recommendations.

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If you are keen to find out more about how you can improve your pension savings or help your employees with theirs, then please contact us and we will do everything we can to assist you.

New Pension Schemes Bill to benefit 20 million workers

The Government’s new Pension Schemes Bill is expected to make it easier for millions of people to manage their pensions, by improving returns, and combining smaller pension pots to create bigger and better pension funds.

The benefits of combining smaller pension pots can’t be underestimated, as typically the costs associated with managing these funds will fall, automatically increasing returns. This is all part of the Government’s Plan for Change, which is designed to put more money in people’s pockets.

Many workers will often create small pension pots with the various employers they work with, as few people will stay with a single employer for most of their working life – a big change from years gone by. Changing the system to enable these smaller pots to be combined into a single, larger pot that can be monitored more easily and with lower overall fees will go a long way to helping people better understand their overall financial position when they are heading towards retirement.

What will this mean for people nearing retirement?

Anyone approaching retirement will also benefit from “clear default options” for turning their pensions into retirement income, including more secure routes to deciding how they use their pension when the time comes.

This is potentially useful as the Pension Freedom rules which came into effect on April 6, 2015, removed the requirement to buy an annuity with your pension, but the extra choice has made it difficult for some people to know what to do for the best.

The suggestion from Chancellor Rachel Reeves is that all pension schemes should offer a default route to creating an income in retirement. While this would simplify things for people, it may result in some not choosing anything other than the default route, which may not be the best option for them. If you aren’t sure that what is the best option for you, either when these planned changes come in or before, then speak to your accountant for advice before you vest your pension.

The Chancellor said: “The Bill is a game changer, delivering bigger pension pots for savers and driving £50 billion of investment directly into the UK economy – putting more money into people’s pockets through the Plan for Change.

“The Bill will transform the £2 trillion pensions landscape to ensure savers get good returns for each pound they save, and drive investment into the economy, through a suite of measures…”

These measures include:

• Requiring Defined Contribution (DC) schemes to prove they are value for money, to protect savers from getting stuck in underperforming schemes.
• Simplifying retirement choices, with all pension schemes offering default routes to an income in retirement.
• Bringing together small pension pots worth £1,000 or less into one pension scheme that is certified as delivering good value to savers, making pension saving less hassle and more rewarding.
• New rules creating multi-employer DC scheme “megafunds” of at least £25 billion, so that bigger and better pension schemes can drive down costs and invest in a wider range of assets.
• Consolidating and professionalising the Local Government Pension Scheme (LGPS), with assets held in six pools that can invest in local area infrastructure, housing and clean energy.
• Increased flexibility for Defined Benefit (DB) pension schemes to safely release surpluses worth collectively £160 billion, to support employers’ investment plans and to benefit scheme members.

Source: Gov.uk

Pension changes are expected to accelerate

The Government is trying to accelerate change in the pensions marketplace to ensure people have more money in their pension fund at retirement. The changes are described as “urgent” by Minister for Pensions Torsten Bell.

He said: “Pension saving is a long game, but getting this right is urgent so that millions can look forward to a higher income in retirement.

“The Pension Schemes Bill is part of this Government’s significant pension reform agenda. It follows the major consolidation of the UK pension system set out in the Pension Investment Review.”

The need for simplification is real, as experts feel that the way pensions work has become too fragmented and too complex.

Rocio Concha, Director of Policy and Advocacy, Which? said: “It’s good to see the government taking steps to simplify them and ensure schemes provide value for money. Which? has campaigned for years for the consolidation of small pots, so we are delighted that this Bill is seeking to do just that – a move that will provide greater value for savers and support them to keep track of their pensions.

“Which? looks forward to working with the government to ensure the pensions system is fit for the future.”

Both Defined Contribution and Defined Benefit schemes covered

The two main types of pensions – Defined Benefit (DB) and Defined Contribution (DC) will both be in the sights of the Government’s simplification plans. DB pensions are the more traditional schemes, where the amount of pension you receive is based on the amount of salary you were earning when you retired from the company or organisation.

These are much rarer now, and it is much more common for people to be in DC schemes. These are where you pay in a certain amount, which is often matched by your employer, or it may pay in more or less than you do, but the amount you receive at retirement depends on the performance of the underlying pension fund investments over time. The DC pensions are the ones where you have to think about how to take your pension when the time comes, as there are a variety of ways you can currently do this, which is adding to the confusion.

Nausicaa Delfas, Chief Executive, The Pensions Regulator (TPR) said: “The Pension Schemes Bill is a once in a generation opportunity to address unfinished business in the UK pension system. Making sure all schemes are focused on delivering value for money, helping to stop small, and often forgotten pension pots forming, and guiding savers towards the right retirement products for them, will mean savers benefit from a system fit for the future.

“We have long advocated for fewer, larger well-run schemes with the size and skill to deliver better outcomes for savers. As such we are also pleased to see the proposed legislative framework for DB superfunds, providing options and choice in defined benefit consolidation.”

The bill will cover a number of other points, and you can find out more about the Government’s Pension Investment Review on Gov.uk.

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Trump’s tariffs hit the markets – what should you do?

The first 100 days of the Trump administration has certainly created consternation across the world, as Donald Trump’s implementation of tariffs – which have been on again and off again and are currently suspended for most countries at the time of writing – have spooked world markets.

The latest shock to the Dow Jones and the S&P 500 came from Donald Trump’s threat to remove Jerome Powell, head of the Federal Reserve, from his post. But again, at the time of writing, he had walked back from that too. That said, things are changing so quickly at present, there is no telling what may have happened by the time you read this.

So, the only thing you can really do is work on the basis that markets are going to be volatile for the foreseeable future, and even if they have gone up in recent days, all it takes is for another shock from the Trump administration or elsewhere to shake things up once again.

How to deal with market volatility

As markets go up and down at pace, it can be tempting to make knee-jerk decisions, especially if you’re seeing your investment portfolio fall like a stone. But remember, the only time you actually lose money, is when you crystallise a loss.

If you have, say, £150,000 in a portfolio, then seeing this fall by 10% for example to £135,000 could be very concerning. But panic selling is not the answer, as you will then no longer be invested and cannot benefit from any subsequent market rise. If you stay invested, then when the market recovers, you will see the value of your investments rise too.

This could take some time, especially if there is little in the way of good news for a longer period. But as the traders build in some elements of the uncertainty we are currently seeing into their forecasts, hopefully the volatility will decrease. Only time will tell whether this will happen.

Using the volatility to your advantage

One thing to bear in mind is that if you have money available to invest currently, then you are likely to benefit from the volatility we are seeing. In essence, when the markets fall, you are effectively buying your investments at a sale price and will see your money grow more quickly when markets rebound.

For example, let’s say before the market fell, the shares or units you wanted to buy cost £10 each, and you have £100 to invest. So, you would be able to buy 10 shares at this price. But if the market fell by 20%, then the shares would fall in price to £8, and investing the same amount would give you 12 shares instead of 10, with £4 left over.

If the share or unit price returned to its previous level, then in the first example you would have £100 once again. But in the second example, you would have £120 when you had only had to invest £96 at the cheaper price and still managed to get two more shares.

Investing regularly can smooth out the ups and downs

The easiest way to make the most of the volatility is by investing regularly in the markets, as that way you can buy on the ups and the downs. Timing the market is very hard, and anyone who waits until ‘the right moment’ is likely to miss out on the best days to make returns on their investment.

Calculations from Fidelity Investments show that since December 31, 1992, if you missed the 30 best days in the FTSE100, you would have seen your investments grow by just 81% to April 7, 2025. Missing the five best days would have seen returns of 466%. But if you had stayed invested for the whole period from 1992 to April 7, 2025, you would have 763% more than you invested in the first place.

So, if you split your investment over a period of, say, 12 months, and drip-feed it into the markets, then you will be investing at whatever price the market happens to be on the day. Some days you will get more for your money, other days you will get less. But over time, the likelihood is you will gain more, because being in the market consistently has proven historically to be more important than trying to time the market.

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If you want to find out how to deal with the current volatility, then please get in touch with us and we will do whatever we can to help.

New rules from April for pension scheme returns – are you ready?

From April 6, anyone managing a pension scheme will need to submit their pension scheme return (PSR) on the Managing Pension Schemes service, with the Pension Schemes Online service no longer being used for this.

This will apply to the returns for 2024/2025 and you will receive a notification on the Managing Pension Schemes service which will tell you the deadline for submitting your PSR. There are two types of these available to you: the standard and the self-invested personal pension (SIPP).

For this year, you can expect to have to fill in more details than you previously had to on the PSRs that were filed through the Pensions Online Service. But the expectation is that some of this information will be pre-populated into the forms in future, which should help to streamline the filing process for you.

The details you need to provide will depend on the size of the scheme. Those using the standard PSR will only need to file a full return, including members’ details, if there are less than 100 scheme members. Most schemes will need to provide designatory details.

Migrating your pension scheme to the new service

You will need to migrate your pension scheme to the Managing Pension Schemes service, but it will give you access to real-time updates, including the ability to:

• Immediately see changes.
• View submitted information.
• View details of payments and charges.

If you have more than one pension scheme, you can see a list of your open pension schemes on the Pension Schemes Online service via the Managing Pension Schemes service before you migrate them. But you will need to enroll on the Managing Pension Scheme service before you can view this list.

Once you have completed your enrolment, you can select ‘Add a pension scheme from the Pension schemes online service’ and select each scheme you need to migrate. Only ‘open’ schemes on the Pension Schemes Online service will be active and possible to migrate. If other schemes you had in the past that are inactive or need to be wound up are visible, then you should email: migration.mps@hmrc.gov.uk and use ‘Managing pension schemes — Wound Up Schemes’ as the subject line.

Use the same email address if you have incorrectly tried to re-register an existing pension scheme you are an administrator for, with ‘Incorrect scheme registration’ as the subject.

Eventually, the level of financial information available to you via the new service will be enhanced. This will give you access to more accounting details via the portal, such as:

• A more detailed overview of due and overdue penalties and charges, including cleared amounts and interest accruing.
• Details of payments allocated to charges and penalties.
• Details of cleared charges and penalties.
• A breakdown of a credit balance available for refund.

You can find more information about the changes to 2024 to 2025 pension scheme return for Pension Scheme Administrators online at GOV.UK.

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If you will be affected by these changes and want to make sure you don’t make a mistake, please get in touch as soon as possible and we will do everything we can to help you.