Steve Berridge, Pensions Technical Services Manager at IFGL, examines what an Andy Burnham government and John Healey’s surprise appointment as Chancellor could mean for pensions policy, inheritance tax reforms and long-term retirement planning. With major legislative changes already in motion and speculation mounting over future tax policy, advisers will be watching closely to see whether the new government brings continuity or a change of direction.
A new era begins in Westminster
Fans of Game of Thrones will remember the popular character Jon Snow, an outsider in his family, who rose through a series of battles to assume the title of “King in the North”. Well today the UK has its fifth Prime Minister in four years as Andy Burnham, described by many as the “King of the North”, takes over the role. This continues a remarkable period of political change in the UK. The last Prime Minister to both be elected and removed by a general election was Edward Heath, more than fifty years ago.
So, what can we expect from the new Prime Minister? Quite possibly a change of tone. The new incumbent is clearly more comfortable in front of the cameras than his predecessor, with a quick, dry wit. With his love of Everton Football Club, Oasis and the Stone Roses, he is also arguably more relatable for many people.
In his inaugural speech, he talked about putting life’s essentials back into public control and delivering a 10-year plan for Britain. Perhaps that is a nod to his time as Mayor of Greater Manchester, where he brought the city’s public transport back into public control. He also spoke about reforming the education system to help more young people into work, reducing the welfare bill, and creating both a new political model and a new economic model.
What is undeniable is that Mr Burnham has a huge task ahead of him.
Those of us in the pensions world will be intrigued to see how things develop. In April 2027, for example, defined contribution pensions are due to fall within the scope of inheritance tax for the first time. This will be a significant change for many people approaching or already in retirement who hold sizeable unused pension pots.
John Healey takes the Treasury reins
The inheritance tax changes were, of course, announced by Rachel Reeves, who has already been replaced as Chancellor by John Healey in a surprise appointment.
What do we know about Mr Healey? He is a long-standing MP, having first been elected during Tony Blair’s landslide victory in 1997. He served as Economic Secretary to the Treasury from 2002 to 2005 before becoming Financial Secretary to the Treasury from 2005 to 2007 under Gordon Brown. Most recently, he served as Secretary of State for Defence before resigning in June 2026, arguing that the Defence Investment Plan agreed by Rachel Reeves was insufficient to meet the UK’s security commitments and defence objectives.
Mr Healey is widely regarded as an experienced pair of hands, with hopes that he can steer the Treasury towards calmer waters following a turbulent period marked by controversial legislation.
Will pensions policy change direction?
Returning to Mr Burnham, it is believed he may favour further increases to Capital Gains Tax (CGT) and possibly even a wealth tax. Any such moves could have important implications for the pensions industry.
Higher CGT could make pensions even more attractive, given that investment gains within pension wrappers remain free from CGT. However, debate continues over whether a wealth tax could accelerate the departure of high-net-worth individuals from the UK, something that would be far less welcome for the pensions and wider financial services industry.
It is also worth remembering that Mr Healey was at the Treasury during the Gordon Brown era that delivered the Finance Act 2004, legislation that, more than 20 years later, still forms the foundation of today’s pensions tax regime.
Will he make any last-minute amendments to the Finance Bill 2025-26, which introduces the sweeping inheritance tax changes due to take effect from April 2027? While commitments have been made to the state pension, relatively little has so far been said about the future of private pensions, despite the fact they remain central to retirement planning for millions of UK workers.
A delicate balancing act
What is not in debate is that the new front bench faces a delicate balancing act. Managing the public finances, already under pressure from higher borrowing costs, while maintaining confidence in UK plc will not be easy.
We wish Mr Burnham and his new Chancellor well and will watch with interest how he and his team view the pension world in the coming months. The UK currently has a problem of inadequate private pension provision, so we hope that pension policy is sensible and measured, not discouraging what is an important area of personal saving.
