DWP could give £29,000 boost to millions of workers paying into pensions

Wales Online

07-07-2025

DWP could give £29,000 boost to millions of workers paying into pensions
A new UK Government Bill is reforming pensions, with 20 million set to benefit from the changes
A major government reform will aim to create larger pension schemes
(Image: Mike Kemp, In Pictures via Getty Images )
Workers earning an average wage and contributing to a pension pot throughout their career could receive a financial uplift from the Department for Work and Pensions. The government department suggests individuals could benefit by up to £29,000 by the time they retire.
This is due to significant government reforms that will consolidate small pension pots, ensure schemes offer value for money, and create larger pension schemes. This figure was disclosed as the Pension Schemes Bill returns to Parliament for its second reading on July 7.
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Reforms in the Bill aim to assist 20 million pension savers to get more from their pension pots and be better prepared for retirement.
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The State Pension ag, which currently stands at 66 for both men and women, will be increasing from next year. It will gradually rise to 67 between 2026 and 2028 for those born after April 1960.
The transition process is then anticipated to be completed for everyone by March 2028. The planned alteration to the official retirement age has been in legislation since 2014, with a further increase from 67 to 68, which is set to be implemented between 2044 and 2046, reports the Liverpool Echo.
The UK government also modified the phasing of the State Pension age increase, meaning that instead of reaching the State Pension age on a specific date, individuals born between March 6, 1961, and April 5, 1977, will be eligible to claim the State Pension once they turn 67.
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Ahead of the forthcoming adjustments, individuals will receive a letter from the Department for Work and Pensions. The Pensions Act 2014 necessitates a systematic review of the State Pension age at minimum intervals of five years.
This review is guided by the belief that people ought to have the opportunity to spend a certain fraction of their adult lives in receipt of a State Pension, with an assessment of the planned rise to 68 scheduled before the conclusion of this decade.
The examination of the State Pension age will take into account factors like life expectancy among others. Based on the review's outcomes, UK government may consider enacting alterations to the State Pension age.
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Parliament must approve any proposed amendments before they can be enacted. For money-saving tips, sign up to our Money newsletter here
The Bill will bring together small pension pots worth £1,000 or less into one pension scheme At present many people struggle to keep track of multiple small pensions as they move jobs and can pay high fees as a result..
Government officials say these steps will establish the groundwork for the imminent Pensions Review which will delve into achieving a just and enduring pension structure, driving growth, and realising the government's Plan for Change.
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Pensions Minister Torsten Bell said: "We're ramping up the pace of pension reform, to ensure that people's pension savings works as hard for them as they worked to save.
"The measures in our Pension Schemes Bill will drive costs down and returns up on workers' retirement savings – putting more money in people's pockets to the tune of up to £29,000 for an average earner and delivering on our Plan for Change."
According to Gov.uk, the pace of pension reform has ramped up with measures in the Bill set to revolutionise the pensions landscape in the coming years. Despite the advancements, significant challenges remain as these benefits are diverse for different workers and groups.
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In light of this, the forthcoming Pensions Review will look at issues such as pension adequacy to ensure that underserved communities are not left behind as new initiatives roll out.
The reforms outlined in the Bill also aim to protect the Local Government Pension Scheme (LGPS) for the future by consolidating some £400 billion worth of assets into a limited number of proficient asset pools capable of investing in local infrastructure, housing, and clean energy.
Zoe Alexander, Director of Policy and Advocacy for the Pensions and Lifetime Savings Association (PLSA), remarked: "The introduction of the Pension Schemes Bill is a significant milestone, bringing forward necessary legislation to enact important reforms that have the full backing of the pensions industry.
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"This includes small pots consolidation, the Value for Money regime, decumulation options and changes to give DB funds more options for securing member benefits over the long-term.
"Once fully implemented, these measures should reduce the cost of administering pensions, remove complexity for savers and help ensure schemes are maximising the value they provide members."