Pension news

Updates from the budgets 2023/24

The Chancellor of the Exchequer presented the Autumn Statement in November 2023 and the Spring Statement in March 2024. Here is a summary of what was included:

• The State Pension increased by 8.5% to £221.20 a week from April 2024, worth up to £900 more per year.

• The Government will continue their commitment to the State Pension triple lock.

The new Government, elected in July 2024, presented their first budget at the end of October 2024. Inherited pensions will be subject to inheritance tax. Inheritance tax is levied at 40% on any amounts above the threshold, which is currently £325,000 for most people. The Trustee will continue to monitor any announcements from the Government as to whether there will be any direct impact on your pension.

Pension scams – stay vigilant

Cyber-crime is a growing threat in the UK and throughout the world. We encourage you to stay alert against any suspicious calls, texts or emails which could be a scam. If you do receive any suspicious messages or calls, please do not hand over any information such as your bank account details. Instead, hang up, or delete any worrying texts or emails.

The Trustee has taken action to attempt to prepare itself in the growing threat of cyber-crime against pension schemes. The Trustee has implemented a Business Continuity Plan, a Cyber Incident Response Plan, and has engaged in training relating to cyber threats. The Trustee continues to be diligent in this area and consider all appropriate actions.

As well as more general cyber-crime, some criminals will specifically try to target your pension savings. It is important that you understand the rules around your pension and what tactics scammers might use.

The most common scams will:

• Try to convince you that you can get more money by investing your pension somewhere else – anything offering guaranteed returns, or that sounds too good to be true, is likely to be a scam.

• Offer you a loophole or another scheme to access your pension before age 55.

• Pressure you into making a decision, rather than give you time to seek professional advice from a regulated adviser.

It is illegal to make cold calls about financial services, including pensions, so if anyone contacts you out of the blue, it is likely to be a scam.

If you are unsure about any offer you have received, investigate it fully and take professional advice. You can check if an adviser is regulated on the FCA website, and find out more about how to avoid scams, at www.fca.org.uk/consumers/protect-yourself-scams

Accordingly, we have the following guidance to help reduce the risk of falling foul of scammers:

• Protect your email with a strong password (tip: use three random words to create a single password that is difficult to crack).

• Do not share your password with anyone.

• Install the latest security updates to your internet browser and computing devices.

• If in doubt, do not open emails from senders you do not recognise.

• Check links look correct before you click on them.

• Be suspicious of anyone who asks for your bank account or credit card details.

• If the email contains spelling mistakes, this can be a sign that this is a scam. Do not open the email or attachments.

• If you think you have been a victim of fraud you should report it to Action Fraud, the UK’s national fraud and internet crime reporting centre, on 0300 123 2040.

You can visit the following page on the member website which tells you more about how to stay safe from pension scams at www.mydowpension.co.uk/dow-services-section/pension-scams

Take the FCA ScamSmart quiz to see how scam smart you are at www.fca.org.uk/consumers/take-our-pensions-scam-quiz

State Pension age

The State Pension age (SPa) is the earliest age you can start receiving your State Pension. The SPa for both women and men changed from 65 to 66 between 2018 and 2020. The Government plans to increase the SPa to 67 by 2028, and eventually increase it to 68.

If you are approaching retirement in the next few years, we strongly encourage you to check at what age you will start receiving your State Pension and how much money it will provide. You can do this by visiting the State Pension website www.gov.uk/state-pension-age

Alternatively, you can request this information by phoning 0800 731 0469.

Minimum Retirement Age

The youngest age most people can start to receive their pension benefits will go up from 6 April 2028 – from age 55 to age 57. The aim of this change is to keep the minimum retirement age around ten years below the SPa, which is due to rise gradually as outlined above. If you are in the DCL section of the Plan you will retain a protected pension age of 55. If you are in the Dow Services section, some members will retain a protected pension age of 50, but this depends on your sub-section of membership.

If you are not sure if you have a protected pension age, you can contact the administration team using the details on the contact us page.

Pension tax changes

Changes to the Lifetime Allowance:

The Lifetime Allowance (LTA) was the limit on the amount of money an individual could take from their pensions without incurring additional tax charges.

From 6 April 2024, the LTA was abolished and replaced by two new allowances:

• Lump Sum Allowance (LSA)

• Lump Sum and Death Benefit Allowance (LSDBA)

The LSA is a limit on the amount of tax-free money you can take as a lump sum from your pension. The maximum limit is £268,275 and includes any lump sums you have taken from other pensions.

The LSDBA is a limit on the amount of tax-free money paid out during your lifetime or when you die. The standard LSDBA is £1,073,100.

More information about changes to the LTA can be found at www.moneyhelper.org.uk/en/pensions-and-retirement/building-your-retirement-pot/lump-sum-allowances-for-pensions

Annual Allowance:

This is how much money you can save into your pensions each year without incurring extra tax. This is currently set at £60,000 a year.

Tapered Annual Allowance:

For high earners, the Tapered Annual Allowance reduces the annual allowance for each £2 of total taxable earnings above £260,000. You should seek independent financial advice if this applies to you.

Cash at retirement:

When you start drawing money from your pension account you can choose to receive a tax-free lump sum payment of up to 25% of your pension or LTA (whichever is lower). The maximum amount you can claim tax-free is currently £268,275. The maximum amount will be frozen at this figure, even though the LTA has been removed. If you have existing protections from the LTA and were entitled to a higher tax-free lump sum on 5 April 2023 you will continue to be entitled to this higher sum.

For more information on pensions legislation and taxation, take a look at the pensions page of the Government website www.gov.uk/browse/working/workplace-personal-pensions

If you are not sure how these changes will affect you or want more information about the budget, the Government’s MoneyHelper website has a useful article and contact details for further help. www.moneyhelper.org.uk/en/blog/everyday-money/what-the-spring-budget-means-for-you

Pensions Dashboard

The Department for Work and Pensions announced the Pensions Dashboard Programme (PDP) in 2022. This is a project dedicated to the creation of a centralised platform for accessing your UK pensions online. To simplify the tracking and management of any pensions you have, the dashboard will allow you to view all your pensions information, from multiple sources in one place, including the State Pension.

Having now completed the development and testing phase, the PDP are working with volunteer pension schemes and providers to test the service with real data. All schemes in scope will need to be connected by 31 October 2026.

When it is live, you will be able to register and, following an identity check, submit requests to your various pension scheme providers.

Details of any pensions successfully matched to you will be added to the dashboard so that you can view all your pensions information in one place.

It is important that you always keep your personal details up to date so that once the Pensions Dashboard is launched your records can easily be matched and you see the most accurate information.

If you are a Dow Services Section member, you can check if we have the most up-to-date details by logging into your personal pension account at portal.hartlinkonline.co.uk/mydowpension

If you are a DCL Section member, please contact the Aon administration team at DCLPensions@aon.com

Find out more about the programme by visiting www.pensionsdashboardsprogramme.org.uk/about

The Pensions Regulator has provided guidance on how you can be matched to your various pension pots at www.thepensionsregulator.gov.uk/en/trustees/contributions-data-and-transfers/dashboards-guidance/matching-people-with-their-pensions

If you think you may have lost track of an old pension, use the Government’s pension tracing service at www.gov.uk/find-pension-contact-details

Retirement Living Standards

Understanding how much you’ll need in retirement is essential when planning for your future, no matter what age you are. The answer can provide clarity on knowing if you are ready to retire and how much you need to save into your pension.

To help you get a picture of what your retirement may look like the Pensions and Lifetime Savings Association (PSLA) has developed the Retirement Living based on independent research by Loughborough University.

The three standards – minimum, moderate and comfortable – take into account the costs you are likely to face in retirement and act as a guideline to show you how much money you might need each year depending on the kind of lifestyle you want.

Find out more and see for yourself how much income you need in retirement by visiting www.retirementlivingstandards.org.uk