We’ve put together a summary of what’s changed in the 2024/25 tax year to help you understand any impact on your employees’ pension savings.

There are three main changes:

The Lifetime Allowance (LTA) is being replaced by the Lump Sum Allowance (LSA) and Lump Sum and Death Benefit Allowance (LSDBA), which will still control the amount of tax-free cash your employees can receive.

The lump sum allowance is limited to £268,275. It's the total amount of tax-free sums that your employees can receive during their lifetime, across all of their pension savings. It applies to them unless they have a protected right to a higher lump sum allowance or transitional rules apply.

The lump sum and death benefit allowance is £1,073,100. It covers the tax-free sums under the lump sum allowance and certain death benefits and other lump sums that are payable tax-free, such as serious ill-health lump sums.

Your employees will generally not be affected by the changes to Lifetime Allowance if their total pension value (excluding the State Pension) is less than £1,073,100. If your employees think they may be over the lump sum allowance limit or the lump sum and death benefit allowance, or close to it, they should understand that they may be liable for a tax charge and should seek financial advice. They can find a retirement adviser on the MoneyHelper website if they don’t already have an adviser.

Find out more here.

The National Insurance rate is now 8% based on an income of £12,570 to £50,270 a year, which is 2% less than last year.

If your employee’s income is under £12,570 or above £50,270, there are no changes to their National Insurance rate. It’s worth noting that the personal allowance – the amount of income most people can have without paying income tax – has not changed and remains at the same level of £12,570. If your employees do not fall into the Class 1 type of National Insurance or need further support, they can find more information on the MoneyHelper website.

The table below shows the changes to the National Insurance rates:

The State Pension has increased by 8.5% compared to last year.

More than 12 million people currently receive the state pension. Those born between 6 October 1954 and 5 April 1960 start receiving their pension at the age of 66. But for people born after this date, the state pension age has increased to age 67. The State Pension age is likely to increase in the future, which is why it’s so important your employees save into a workplace pension. Find out more about the State Pension on the MoneyHelper website.

Please note that pension policies and regulations do change, so please check with official Government sources, like MoneyHelper.