Six pension changes to expect in 2024 – including Mansion House reforms

With a raft of potential pension changes announced in the Autumn Statement and a general election on the cards for 2024, now marks an uncertain time for pension savers.

Alice Guy, head of pensions and savings at interactive investor has outlined what savers “need to know” for the year ahead, as well as six changes that could affect their pension and investment wealth.

State pension increase

Ms Guy said: “Pensioners are looking forward to an 8.5 percent rise in the state pension in April 2024, the second biggest percentage rise in the last 30 years.”

According to Ms Guy, this increase will take the full new state pension to £11,501 a year, although those who retired before April 2016 are on the basic state pension and many will only get £8,812.

READ MORE: DWP to pay over £600 in one-off payments before end of next month

Who is entitled to the full state pension?

People can claim the new state pension if they’re:

  • A man born on or after April 6, 1951
  • A woman born on or after April 6, 1953.

People need at least 10 qualifying years on their National Insurance record to get any state pension, and around 35 years to receive the full payment.

Who is entitled to the basic state pension?

To get the basic state pension, people need to be either:

  • A man born before April 6, 1951
  • A woman born before April 6, 1953.

Ms Guy said: “There are no big state pension changes expected in 2024, and we’re unlikely to see any big announcements on the state pension this side of the election.”


Ms Guy said: “Red hot inflation is expected to cool in 2024, with the OBR predicting it will drop to around two percent by the end of 2024.”

However, she noted some experts expect inflation to prove more stubborn, meaning pension savers may need to save more to achieve the same standard of living in retirement.

Ms Guy added: “The good news is that, with wages rising faster than inflation, the cost of living crisis is showing signs of beginning to ease, hopefully making pension contributions slightly more affordable.”


Ms Guy said: “Shrinking dividend and Capital Gains Tax allowances will make protecting your wealth from the taxman inside an ISA or pension even more important next year.”

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In April 2024, the Capital Gains Tax-free allowance will reduce to £3,000, down from £6,000 in 2023/24 and £12,300 in 2022/23.

Additionally, the amount of dividend income a person can earn before paying tax will reduce to just £500 each tax year, down from £1,000 this year and £2,000 in 2022.

Ms Guy said: “With an investment portfolio of £50,000 yielding four percent dividend income, you could end up paying up to £500 dividend tax on shares held outside an ISA or SIPP, and a capital gain of £10,000 could leave you with a £1,400 tax bill if you’re a higher rate taxpayer.

“Acting, before the end of the tax year in April to make use of this year’s allowances could potentially save a big tax bill down the line. For example, you could sell your existing investments, keeping any gain under the threshold for tax, and use the proceeds to rebuy investments inside a pension or ISA.”

Mansion House pension reforms

Ms Guy said: “Last summer, [Chancellor] Jeremy Hunt announced major plans to boost the UK economy by encouraging workplace pension schemes to invest more in unlisted smaller companies, including in the UK.”

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The so-called “Mansion House” reforms include measures such as an agreement between nine of the country’s biggest pension funds to invest five percent of their assets in start-ups and private equity.

According to Ms Guy, the reforms won’t take full effect until 2030 and aren’t expected to affect SIPP pension savers who can choose where to invest.

She added: “The hope is that over time, pension savers will see a “slight improvement” in investment performance as smaller companies tend to grow faster than established large companies.”

Pension pot for life

One of the “biggest surprises” in the 2023 Autumn Statement was Mr Hunt’s pension “pot for life” announcement, which could be a “game changer” for pension savers, Ms Guy said.

During his statement, Mr Hunt said he would consult to introduce a “pension pot for life” for workers, in which they may soon be able to choose their pension provider and will be given a “legal right” to ask employers to pay contributions into their existing scheme.

However, Ms Guy noted: “Plans to give workers a choice of workplace pension provider could take years to happen in practice, with lots of practical details to iron out.

“In the meantime, there’s no need to wait for changes to take control of your pension wealth and consolidating existing workplace pensions could save you time and money in the long run. Just check first, to make sure you won’t miss out on any valuable benefits.”

Lifetime allowance changes

For people with larger pension pots, Ms Guy said the abolition of lifetime allowances last year was “amazing news”.

But although lifetime allowance charges have been removed, there will now be a £268,275 cap on the tax-free lump sum people can take from their pension.

Ms Guy said: “If you have existing lifetime allowance protections then check with your provider, as you may be able to keep a higher tax-free allowance in some circumstances.”

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