Pension legislation

Pension legislation controls the state pension, the tax you pay on pension contributions and withdrawals, employers’ pension responsibilities, and what you can do with your pension pot when you retire. UK pension legislation changes regularly, and there have been lots of important changes recently.

UK pension rules

Pension legislation is complicated and it changes regularly. It governs the state pension, including who can claim it and how much they can claim.

Pension legislation also dictates how workplace pensions and personal pensions should be managed, and when and how pension savings can be withdrawn.

Pension tax rules are particularly important, because the way pension contributions and withdrawals are taxed (or eligible for tax relief) can make a big difference to your savings and income.

Recent pension legislation

Pension legislation that’s been passed or implemented recently includes auto-enrolment rules, under which companies must enrol all eligible employees into a workplace pension scheme and make contributions to their employees’ pension pots. This is still being rolled out, so it doesn’t yet apply to all employers.

The government also recently announced new pension freedom rules. Previously, most people who retired with a defined contribution pension would use the money to buy an annuity, which would guarantee them an income for the rest of their lives. Now, the rules are more flexible, and when you’re 55 (rising to 57 in 2028) options include cashing in your whole pot in one go, or taking out chunks of money and leaving the rest of your pot invested to provide you with an income. Or, you can still choose to use the money to buy an annuity. When you’re considering these options, it’s important to consider the tax implications.

The state pension rules have changed recently too, with the old two-tier system replaced with a single state pension, and the state pension age rising. Find out more about these changes and what they could mean for you on our state pension page.

Future changes to pension legislation

Pension rules will continue to change as successive governments introduce new legislation. As governments try to balance their budgets and save money, however, it’s likely that the state pension will become more and more limited, and also that ministers will find ways to incentivise personal and workplace pension saving instead.

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Last edited: 08-03-2017

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