The Chancellor’s Budget included several significant announcements affecting the financial wellbeing of current and future pensioners. From changes to pension policy and social care reform to measures aimed at reducing energy costs, we have summarised the key developments below.
Pensions
- Pension Tax Allowance: From April 2027, the Government will introduce a new allowance to reduce the administrative burden on those whose incomes only slightly exceed the Personal Allowance. Pensioners with incomes at or below the full new State Pension will not become liable for income tax as a result of State Pension uprating during this Parliament.
- Pensions Commission: The Commission will publish its final report in February 2027, recommending measures to ensure private pensions deliver adequate, fair and sustainable retirement outcomes.
- Pension Scheme Reforms: The Government will introduce measures to support Defined Contribution scheme consolidation, a Guided Retirement framework and Retirement-only Collective Defined Contribution (RCDC) schemes. Legislation will be introduced through the Finance Bill 2027-28.
- Changes to the Triple Lock: The Government says adjustments to the Triple Lock will improve the long-term sustainability of State Pension spending, generating estimated savings of £15 billion a year by the late 2030s and £50 billion a year by the late 2040s.
Social Care
- Adult Social Care: The Prime Minister has agreed with Baroness Casey that her Independent Commission on Adult Social Care will now report in 2027.
- NHS Funding: The Budget provides an additional £190 million for NHS services in England to help manage winter pressures and other demands during the remainder of the financial year.
Energy Bills
- Standing Charges: The Government has asked Ofgem to abolish domestic gas standing charges by the end of 2027, with further proposals on electricity standing charge reform to follow.
- Electricity VAT: The temporary 0% VAT rate on qualifying domestic electricity supplies will be extended until July 2027, reducing the annual Ofgem price cap by around £50 from April 2027.
- Household Energy Payment: A £100 payment will be made directly to eligible households from January 2027, supporting up to 20 million households in council tax bands A-D in England.
- Energy Cost Controls: No new policy costs will be added to household energy bills until a new Cost Control Framework is introduced at the 2027 Spending Review.
CSPA View
While the Budget contains some welcome measures, particularly those designed to prevent some pensioners being drawn into income tax and to provide support with energy costs, it leaves significant concerns unresolved.
Of concern is the continued wait for social care reform, with the Casey Commission reporting back in 2027. Older people and their families have faced years of uncertainty over the future of social care, and delayed reform only extends that uncertainty for those who depend on these services.
We are also concerned about the implications of changes to the Triple Lock. Any reforms to the State Pension must be accompanied by clear guarantees that pensioners’ living standards will be protected and that future retirees will continue to receive an adequate and secure retirement income.
CSPA will study the Budget in detail and continue to press the Government to ensure that older people’s interests are protected, retirement incomes remain adequate, and urgent progress is made on social care reform.
The full budget document can be accessed here.
