Could you retire £29k better off?

Big changes are coming to pensions – and they could leave the average worker with an extra £29,000 in their pot by the time they retire.

That’s the headline from the government’s new pension schemes bill, which returns to parliament for its second reading this week. The reforms aim to make pension saving simpler, more transparent and better value for money – helping around 20 million savers get more from what they put away.

What’s changing?

If you’ve ever switched jobs, you might have a few small pension pots scattered around. Millions of people do – and they’re easy to lose track of. These tiny pots (worth £1,000 or less) can also be hit with high charges, quietly eating into your savings.

The new legislation will tackle this by automatically combining small pots into a single pension that offers good value. This will make your pension easier to manage and could mean you pay less in fees over time.

But that’s not all. Other key reforms include:

• value for money rules that will force all schemes to prove they’re delivering decent returns
• the creation of super-sized pension schemes – worth £25bn or more – to help drive down costs and invest more effectively
• simplified retirement options, with every scheme offering a default way to turn your savings into an income
• more flexibility for defined benefit schemes to release surplus money (potentially worth £160bn) to support both members and employers
• reforms to the Local Government Pension Scheme, consolidating its £400bn in assets to invest in local housing, infrastructure and clean energy.

The aim? Less hassle, more growth and better outcomes for savers.

£29,000 better off – or too good to be true?

According to the Department for Work and Pensions, an average earner could be up to £29,000 better off at retirement if these reforms go ahead as planned. That’s a significant boost, and one that could help many people feel more financially secure later in life.

But before you get too excited, it’s worth noting that not everyone agrees with this figure.

As reported by Pensions Expert, the projected £29,000 gain is based on a number of optimistic assumptions – including that savers will stay in the same pension scheme over a long period, and that all the benefits of consolidation and investment growth will be realised equally across the board.

In reality, your results may vary depending on how much you earn, how long you save for and what kind of pension scheme you’re in. And while the changes are positive overall, they won’t solve every problem, especially for people who already face gaps in their retirement savings.

Why it still matters

Even if you don’t end up £29,000 better off, these reforms could still make a real difference. By reducing fees, increasing transparency and cutting down on complexity, the new rules should help savers get more value from their pensions.

The government says this is just the start, with a wider pensions review on the way to address big-picture questions like how much people need in retirement and how to make sure no one is left behind – including lower earners, part-time workers and people in insecure jobs.