The start of a new year often inspires reflection and motivation to plan for the future, and this January marks an important moment to take stock of what lies ahead for pensions.
With several major developments on the horizon, 2025 is shaping up to be a year of both challenges and opportunities for savers. Understanding these changes can help you feel prepared to take control of your retirement strategy and financial well-being.
Here are a few things to watch out for in pensions this year, as well as how it could impact your retirement plans.
The economic outlook
Inflation and interest rates are set to remain key talking points in 2025. Following a rise to 2.6% in late 2024, the Bank of England has predicted inflation to peak slightly higher at 2.75% by mid-year before easing again. While this is far more stable than in recent years, many household costs will continue to climb, so keeping a close eye on your finances will be important.
Interest rates, meanwhile, are likely to follow a downward path, with experts predicting they could fall gradually to 4% by Christmas this year. This may impact savings and annuity rates, meaning now could be the time to review your accounts to ensure you’re still getting the best returns or the product that works best for you.
Although the outlook is calmer than previous years, rising costs can still chip away at the value of your savings and retirement plans. Staying on top of your finances and exploring options to protect your future will be key. That said, before making any drastic changes, it’s always a good idea to seek guidance from a financial adviser to evaluate your options.
The pensions review
The government’s pensions review will be a key talking point in 2025, as it aims to improve retirement outcomes for savers while boosting the UK economy.
Last Autumn, the first phase of the review announced the creation of “megafunds” by consolidating local government pension schemes. This ambitious plan is expected to unlock £80 billion for investment in UK businesses, aiming to drive economic growth and deliver stronger returns for savers.
However, the second phase of the review, set to explore how to address under-saving for retirement, was postponed in late 2024. This decision has raised concerns among experts as millions of Britons continue to face challenges in building adequate retirement savings.
When – and if – the review resumes, one of its key priorities must be encouraging savers to engage with their pensions earlier in life. This could involve initiatives to improve access to financial advice and education, helping people make informed decisions about their future.
A glimpse of the pensions dashboard what’s ahead
The long-awaited pensions dashboard, set to launch in late 2026, is designed to give savers a single, comprehensive view of their pensions, making retirement planning simpler and more transparent. By bringing together your state pension, workplace schemes, and personal savings in one place, it aims to help people take greater control of their financial future in retirement.
Although the full launch is still over a year away, you can expect incremental updates throughout 2025, providing insights into its features and functionality. These developments represent a significant step toward transforming how you engage with your pensions, empowering you to better prepare for retirement and make more informed decisions about your savings.
Preparing for the year ahead
Understanding the latest pension news and developments isn’t always straightforward. With changes to regulations and economic trends, it can feel overwhelming to know how it all affects you personally.
That’s why independent financial advisers, such as those at My Pension Expert, are here to help. They can break down the complexities, explain what it means for your unique situation, and guide you in making informed decisions in 2025 and beyond to secure your financial future in retirement.