What should pension advisers know about in 2024?

What does 2024 look like for pension advisers?

For pension advisers, every new year brings with it changes, trends, and talking points. Knowing that these are plays a major role in the quality of advice you can offer your clients, the amount of trust they place in you, and your reputation.

These are the pension advice trends for 2024 that are currently shaping the industry.

What is driving the demand for pension advice?

As time goes on, pension advisers are seeing a growing demand for pension advice. Numerous factors contribute to this, including the ageing population, the current economic environment, and changes to taxes and allowances.

Ageing population

With today’s medical advancements, Aegon reports that one in four UK-born babies can expect to live to nearly 100 years old. This increased life expectancy makes people realise that their retirement savings may have to last longer than they originally anticipated. A significant portion of the population seeks pension advice because they fear running out of savings before they die.

Most clients’ top priority when approaching pension advisers is to find out how they can create a retirement income that will sustain their current lifestyle while retaining the bulk of their capital. Although this is still a significant driving force behind seeking financial advice, the statistics are lower than five years ago because people are struggling under the current economic pressure.

The economic environment

The market volatility and high cost of living are driving many people to seek retirement advice. Many people are retiring later these days and changing their withdrawal rates and wealth transfer plans in an attempt to survive the current economic conditions.

58% of pension advisers believe that the current higher interest rates and volatile markets will see clients seeking pension advice. This is expected to increase to 62% in the next three years.

Many pension advisers have reported a higher percentage of clients withdrawing their entire retirement savings over a short period. This trend has increased from 15% in 2023 to 24% in 2024.

Tax and allowances

The chancellor’s Spring Budget of 2023 highlighted several changes to pension policy rules. As these rules come into effect this year, many clients are seeking assistance in navigating the pension arena to maximise their benefits.

One of the changes includes the elimination of the Lifetime Allowance (LTA), which is the amount people could accumulate in their pension funds before being liable for tax payments. The 2023 increase to the Money Purchase Annual Allowance and the National Insurance adjustment are also subjects that clients want to discuss with pension advisers.

Many clients’ top priorities are maintaining their standard of living while planning to assist the next generation financially with their pension savings, causing them to seek out pension advisers for assistance.

Will there be an increase in state pension?

State pensions will increase by 8.5% in April 2024. This is due to the growth of average earnings between May and July 2023 and in keeping with the triple lock pension system. 2024’s increase is the second-largest increase in the State Pension fund’s existence.

The increase means those receiving the full new State Pension will now take home £221.20 per week, compared to the current £203.85. Those on the pre-2016 basic State Pension will earn £169.50, against the present amount of £156.20.

Even with the new increases, experts suggest that the State Pension will only cover a pensioner’s minimal retirement needs. Therefore, it is imperative to help clients increase their pension benefits. 

What is changing with the public sector pension in 2024?

Public sector pensions that have been in play for a year are set to receive a 6.7% increase on April 8, 2024, in accordance with the September to September Consumer Price Index (CPI) increase. Public sector pensions paid for less than a year will receive a pro-rata increase.

What will the Lifetime Allowance changes be in 2024?

The Government is scrapping the LTA from the pensions tax legislation, effective April 6, 2024. In its place, two new allowances will come into play:

• The Individual’s Lump Sum Allowance (LSA)
• The Individual’s Lump Sum and Death Benefit Allowance (LSDBA)

These allowances aim to cap the tax-free amounts people can withdraw from their pension funds. 

What is happening with the triple lock pension in 2024?

The triple lock pension system requires that State pensions receive an annual increase in April in accordance with the highest of these three metrics:

• Inflation, in line with the previous September’s CPI
• The average UK wage increase
• 2.5%

The triple lock pension was established in 2010 to ensure that the cost of living did not overtake the State pension value. Although there was a temporary suspension after the Covid-19 pandemic, both the Conservatives and Labour have committed to retaining it in the future. 

Pension advice trends in 2024 increase the need for expert advice

With an ageing population, tough economic times, and the need for assistance with new tax legislation, pension advisers will have their hands full with clients seeking pension advice. 

In anticipation of state and public sector pension increases and the abolition of the LTA, it’s crucial that UK citizens know how to manage their money and plan for the future.

Want to work with Unbiased? 

If you want to benefit from the growing number of UK citizens who require pension advice, Unbiased Pro can help. We’ll deliver clients straight to your inbox and ensure you have the tools you need to convert leads to sales.