In a relatively quiet Budget for pensions news, the Chancellor’s Budget speech on 28 October 2026 included the following announcements:
- Death benefits: the two-year rule is being removed, meaning beneficiaries won’t face tax charges just because a lump sum death benefit is paid more than two years after a member’s death.
- DB scheme surplus: new rules confirm surplus payments to members can generally only be made from normal minimum pension age (or earlier in cases of ill health).
- Inheritance tax (IHT): further changes are planned ahead of pensions potentially becoming subject to IHT from April 2027.
- Terminal illness benefits: more flexibility is being introduced around the medical evidence needed to access serious ill-health lump sums.
- DC pensions: planned changes will make it easier to keep certain pension protections when transferring benefits and support greater scheme consolidation.
- State pension: from April 2027, eligible pensioners with income up to the full new State Pension amount will not pay income tax.
- Investment in UK growth: the Government is encouraging pension schemes to invest more in innovative UK businesses.