What’s changed in pensions and finances this year
After several years of low financial mood, people are feeling a little better about their finances this year, according to our Retirement Voice 2024 report. Now in its fourth year, our report reveals that almost half (48%) of people feel positive about their finances, the highest level since 2021.
Despite people’s financial positivity bouncing back, many people are still reeling from the cost of living crisis. Almost half (45%) say it’s affected their mental health or made them more stressed.
Now in their 40s and 50s, Gen X have been caught in a gap between two pension systems, with the decline of final salary pensions and the start of auto-enrolment.
Perhaps that’s why Gen Xers are feeling the least positive about their financial situation (38%) compared to other generations.
They’re also the most likely (30%) to not know what their savings will be in retirement, and the most likely (45%) to think they’ll have a worse standard of living in retirement.
For most people, the quest for both security and flexibility in retirement continues. When it comes to accessing their pension savings, 9 in 10 people (90%) want the security of a guaranteed income for life. And for 8 in 10 people (80%), flexible access to their money is their top priority.
For more insights, read the full Retirement Voice 2024 report.
What happened to pensions in 2024?
Earlier this year, the government launched a pensions review that aims to drive scale and consolidation of Defined Contribution (DC) pension schemes while boosting UK growth.
This should enable greater diversification of investment for DC savers, potentially helping to increase people's pots.
There were notable pensions developments from the King’s Speech, including the new Pension Schemes Bill. This primarily focuses on existing initiatives such as the Value for Money framework and consolidation of smaller pots.
This year also saw the first Budget from a Labour government in 14 years. The Chancellor Rachel Reeves announced a range of measures that impact pensions, but perhaps not as many as expected.
The biggest change was the increase in employers’ National Insurance (NI), which is set to go up to 15% from April 2025. In addition, the threshold at which NI gets paid will go down from £9,100 per year to £5,000.
To offset these additional costs, employers might want to consider paying into their employees’ workplace pensions via a salary sacrifice scheme, reducing both the employer’s and employee’s NI liability as a result.
Another big change was the announcement that pensions will now be in scope for inheritance tax (IHT) for the first time. This will start from 6 April 2027. This means that many more people will now be brought into scope for IHT, which could impact their retirement plans.
There’s good news for pension savers, as the ability to take 25% of their pension pot tax free remains unchanged. The maximum amount people can take tax free also remains the same, which is normally £268,275.
For a full debrief on the key changes, read our Autumn Budget 2024 article.
Digital tools to help employees find their Good Money Moods
Financial positivity may have bounced back to 2021 levels, but there’s still plenty of work to do to get more people feeling better about their money.
To help more employees find their Good Money Moods, we’ve made several enhancements to Money Mindset*, our financial wellbeing platform which aims to boost financial positivity and confidence.
This year, we’ve also been helping employees get to know their money better with our Good Money Mood webinars.
Available to all Standard Life workplace pension scheme members, our webinars answer the questions that may be on employees’ minds, covering topics such as how to create a savings plan, saving for retirement, and managing caring responsibilities.
Charging employees’ pension positivity this Pension Engagement Season
As part of this year’s Pension Engagement Season, we focussed on helping employees to take charge of their pension positivity and invest in their future selves.
Employers are crucial to helping maximise pension engagement across the workforce. To help raise awareness, we provided a range of resources including ready-made communication materials, interactive calendar with key event dates, and member-focussed webinars throughout the campaign.
Pension Engagement Season may be over for another year, but it’s never too late to help your employees get to know their pension better.
You can signpost your employees to MoneyHelper, which provides easy-to-understand guidance on a range of financial topics. And if you’re with Standard Life for your workplace pension scheme, you can also point them towards our library of bitesize financial education content, available on Money Mindset, which provides easy-to-understand guidance on a range of financial topics.
For more insights on financial wellbeing, including resources on how you can help support your employees, visit our Financial Wellbeing hub and read our articles.
*Money Mindset is provided in partnership with Moneyhub Financial Technology Limited
In partnership with Standard Life
Standard Life are part of Phoenix Group, the UK’s largest long-term savings and retirement business. We both share an aligned ambition to help every customer enjoy a life full of possibilities.
