Pension provider Aegon has predicted that the government’s spring statement will be “silent” on pensions.
However, other announcements in the statement on 26 March, 2025, could have “second order impacts” on pensions or pensioners, according to Steven Cameron, pensions director at Aegon.
“One possibility is an extension of the freeze on personal allowances which will drag even more pensioners into paying higher income tax rates,” he said.
“While the spring statement is likely to ‘pass on pensions’, the government has many radical plans for pensions which we’ll hear more of in the coming months. The Pensions Investment Review is likely to lead to workplace pensions placing more of their members’ funds in investments designed to boost UK economic growth, which could also deliver better returns for pension savers.
“And this summer’s Pension Schemes Bill will include new measures to ensure all pensions are offering good value for money as well as plans to bring together small pension pots individuals may have left behind when changing employers.”
Cameron also warned that pressure on government spending could mean there will be greater scrutiny of the state pension age or triple lock.
He said chancellor Rachel Reeves may use the statement “to set the ‘mood music’ for the future direction of travel on tax and spending policy against the overriding economic growth agenda”.
“If the OBR’s report and other budgetary pressures are worse than anticipated, we can’t rule out a ‘rabbit in the hat’ review of the state pension. There’s already an ongoing review of the state pension age and government finances may mean it needs to increase further or faster.
“We also can’t ignore the state pension ‘triple lock’ which has proven costly and unpredictable in recent years. While the government has currently committed to keeping it, the formula might be adapted. Instead of annual increases being the highest of earnings growth, inflation, or 2.5 percent, a smoothing mechanism could be introduced.”
He predicted that one outcome could be that pensioners receive an inflation increase as a minimum. “If, over the previous three years, wage growth has on average been higher than inflation, they could receive an additional uplift. This would protect pensioner purchasing power and make future costs less unpredictable.”
