Autumn Statement: What it means for pensions

Following the significant changes to pensions flexibility introduced in the 2014 Budget, many in the pensions industry were pleased that no new major pensions-related developments were announced in the Chancellor’s Autumn Statement.

Key points

  • The Autumn Statement largely confirms the Government’s plans to introduce flexibility for members accessing their defined contribution pension pots.
  • Changes to the tax treatment of death benefits announced in September are to be extended to include joint life and guaranteed period annuities.

In September 2014 the Chancellor announced that from April 2015, individuals will be allowed to pass on their unused defined contribution pension savings to any nominated beneficiary when they die, instead of paying the 55% charge which currently applies. If the individual dies before age 75, the beneficiary will pay no tax on the funds. If they die after age 75, the beneficiary will pay income tax at their marginal rate or 45% if the funds are taken as a lump sum payment during the 2015/16 tax year. From 2016/17, lump sum payments will be taxed at the recipient’s marginal rate.

According to the Autumn Statement, this tax treatment will now include beneficiaries of policy-holders who have taken out joint life or guaranteed term annuities, provided no payments have been made to the beneficiary before 6 April 2015.

  • The Government has decided (following informal consultation with the pensions industry) not to change the age limit at which tax relief can be claimed on pension contributions (this remains at age 75).

Other measures also confirmed were:

  1. Transfers from funded defined benefit schemes to defined contribution schemes will continue to be permitted. This will allow Defined Benefit (DB) members to transfer out (subject to certain safeguards) if they wish to take advantage of the new flexibilities.
  2. As announced previously, the Government will introduce a reduced annual allowance of £10,000 for money purchase pension contributions for individuals who have flexibly accessed their pension from 6 April 2015
  3. Flexibility for small pots – the Government will continue the small pots rules for withdrawals of up to £10,000 from defined contribution pension savings from 6 April 2015. These rules allow individuals to take up to three small pension pots from non-occupational schemes or, an unlimited number from occupational schemes, without being subject to a reduced annual allowance of £10,000. The age at which an individual can take advantage of these rules will be lowered from age 60 to 55 from 6 April 2015.   


There is a lot of work to be done before the new flexibilities come into force in April so many in the pensions industry were relieved the Autumn Statement did not introduce any new major changes. The impact of the changes on the pensions industry will not be known until the new regime is in force. A key factor will be the impact on the demand for annuities. Additionally, the wider economic impact of the changes is as yet unknown. 

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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Katie Kerr

Senior Associate

I am a Senior Associate in DWF's Scottish pensions team and have extensive experience in advising on all aspects of pensions law.