Five major pension changes coming in 2026

PENSIONERS will see a number of changes coming in 2026 that will impact their finances.

From state pension rises to new services being launched to boost savings, there are several new measures kicking in that could boost people’s retirement pots.

But other key changes could leave you worse off – so it’s important to know about them now so you can prepare.

Here, we’ve outlined everything that’s planned for next year in pensions and what it means for your wallet.

State pension to increase by 4.8% – April 2026

Millions of people claiming the state pension will see their payments rise by up to £574.60 next year thanks to the ‘triple lock’ policy.

The triple lock guarantees that the state pension increases each year by the highest out of inflation, average earnings growth or 2.5%. 

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Wage growth from May-July 2025 was 4.8% this year, making it higher than inflation.

The new state pension is now expected to increase to £241.30 per week, taking the total yearly payment to £12,534.60, up from £11,973.

The ‘old’ state pension, paid to people who reached state pension age before April 6 2016, will rise by £439.40 next year, taking it to £9,614.80 annually.

However, not everyone will receive the full headline figures, as the amount you get is based on your National Insurance (NI) contributions during your working life. 

You need 30 years to get the full old or ‘basic’ state pension, and 35 years to get the full new state pension. If you have fewer qualifying years of NI contributions, you won’t get the full amount.

The state pension rise next year means the full new state pension will almost overtake the personal tax allowance – the amount you can earn without paying any tax. 

Experts say that the state pension will now overtake this amount in 2027 due to ongoing freezes to tax thresholds, raising concerns that state pensioners may have to pay tax for the first time.

However, the government confirmed in its Autumn Budget that any retirees only earning state pension income will not have to pay tax on it during this parliament.

State pension age will start rising from 66 to 67 – from April 2026

The state pension age is set to start increasing from 66 to 67 starting in April next year. This means people may have to wait longer before they can claim the state pension.

The change will impact anyone born on or after April 6, 1960. The age you can then claim the state pension will depend on the date you were born.

You can check your state pension age using a tool on the government’s website here: https://www.gov.uk/state-pension-age.

Pensions dashboards will become available – from October 2026

A new system is set to launch next year that will let savers keep track of their pensions all in one place.

The government is working with pension providers to launch ‘pensions dashboards’ – and the deadline to have the services live is October 2026.

There is set to be a government service, hosted on the government-backed MoneyHelper website. Once this version is live, private pension companies will be able to launch their own versions.

In theory, you will be able to log on and view all of your pensions, where they are held, how much they’re worth, and who to contact about them. You should also see information about your state pension.

Private pension companies may also include tools to help you combine your pension pots or view your predicted retirement income.

Rachel Vahey, head of public policy at AJ Bell, said: “Getting pensions dashboards up and running has been a long-held dream of the government and pensions industry. Doing so will give people the ability to see all their pensions in one place at the touch of a button.

“The dashboard will hopefully make a difference in giving people the confidence to face up to their pension planning and make decisions to secure a brighter financial future.”

A new type of pension (CDC schemes) will open to savers – from late 2026

The government is rolling out a new kind of pension scheme that it says could help boost retirement savings for millions of workers.

There are currently two main types of workplace pensions – defined benefit (DB) and defined contribution (DC). 

DB schemes, where you get a guaranteed income in retirement, used to be more common, but these have gradually been phased out in favour of DC schemes as they are cheaper for employers to run.

But the government is concerned that millions of people are not saving enough for retirement through these schemes, so it is rolling out a new type of pension known as ‘collective defined contribution’ (CDC) schemes.

The idea is that employer and member contributions are all pooled together into a collective fund and then invested, with the aim of growing this pool of money over time.

Savers then get paid a fixed income in retirement, as opposed to spending their pension savings.

Currently, the Royal Mail is the only employer with a CDC arrangement, but earlier this year the government announced it would pass a law allowing more employers to offer this kind of scheme.

The new regulations should kick in from July 31 2026, and employers will then be able to apply to be allowed to offer these schemes.

Pensions minister Torsten Bell said these schemes could boost savers’ pots by up to 60% compared to using traditional DC schemes.

Mr Bell said: “Collective pensions offer a better deal, one where risks are shared, returns are smoothed and retirement incomes are stronger and paid for life.”

Inheritance tax on pensions begins in 2027 – but will affect planning in 2026

Pensions will be brought into the scope of Britain’s hated death tax from April 2027, but experts say that will impact estate planning throughout 2026.

Currently, inheritance tax (IHT) is charged at 40% on the property, possessions and cash, but money saved into pensions and passed on is exempt.

But from April 2027, any pension cash over the current IHT threshold of £325,000 (or £500,000 if you include property and are passing it down to your kids) will be taxed at the same rate.

The shock move sparked outrage among families and the pensions industry, and experts have been warning families thinking of passing on their pensions to start gifting money early to avoid being hit by the tax.

However, it’s worth bearing in mind that only 10% of estates are expected to be affected by IHT by the end of the decade – so most people still won’t be impacted.

If you aren’t sure whether your estate will be impacted, consider getting your house valued and check how much you have in your pension and other savings. 

If you’re leaving your estate to your spouse, you won’t be charged any IHT, and if you are leaving it to your kids, your allowance is £500,000. For anyone else, it’s £325,000 in total, including your property.

Anyone still unsure should consider speaking to a professional for help – although be aware they will usually charge a fee.

Stephen Lowe, director at retirement firm Just Group, said: “It’s important that people who think their estate may be subject to inheritance tax have an up-to-date valuation of their estate, especially their property, so they understand whether they could be affected. 

“Estate planning is complex, and taking professional financial advice can be immensely valuable for those wanting to manage their estate efficiently and pass on the maximum inheritance to loved ones.”