On 30th October 2024, Chancellor Rachel Reeves delivered the first Budget by the new Labour Government. Here’s a breakdown of the key pension points and what they could mean for you.

State Pension and Pension Credit

The State Pension will increase

The Budget confirmed the Government’s commitment to the State Pension triple lock. State Pensions will therefore increase by 4.1% (in line with earnings growth) in April 2025. This will bring payments to £230.25 a week if you receive the full amount of the new State Pension, and £176.45 a week if you receive the full amount of the old Basic State Pension.

Pension Credit will increase

Pension Credit provides a top-up to a minimum amount for pensioners on low incomes. The Pension Credit Standard Minimum Guarantee will also see a 4.1% increase from April 2025, to £11,850 a year for a single pensioner.

The Government is actively working to boost Pension Credit take-up. This is particularly important if you’re eligible to receive the Winter Fuel Payment, which is being means-tested from 2024/25 and could be worth £200 for eligible households, or £300 for eligible households with someone aged over 80. If you’re receiving Pension Credit, you’re automatically eligible for the Winter Fuel Payment.

Tax changes

Your pension may be in scope for Inheritance Tax (IHT)

IHT is a tax on the estate (the property, money, and possessions) of someone who has died. In the past, pension savings have not typically counted towards the value of a person’s estate for IHT purposes – so, for example, if you died before retiring and had pension savings worth £100,000, that sum could be passed to your dependants tax-free without being factored into IHT calculations.

From April 2027, inherited pensions will be included in IHT. However, benefits passed to a spouse or civil partner will still be free from IHT, as will dependants' pensions from defined benefit schemes like ours. More details are still to come regarding how the new arrangements will work in practice, but it may mean more people’s estates exceed the IHT thresholds and therefore trigger a tax charge. The Government have produced some case studies that you can read as part of their consultation on these proposals.

To find out more about IHT, including the thresholds currently in place, visit gov.uk/inheritance-tax

Rules around overseas transfers have changed

If you want to transfer your pension to a scheme outside of the UK, you’ll need to check how much tax you’ll pay. Visit gov.uk/transferring-your-pension for further information.

As ever, the Budget will affect some people more than others – but whatever your situation, we’d like to take the opportunity to remind you to check in on your QinetiQ pension and make sure you understand what it’s worth. The easiest way to do so is via our Member Portal.

This article does not constitute financial advice and is based on our understanding of Government proposals as at 18 November 2024. If you are unsure about how the Budget may affect you, we recommend taking independent financial advice.