A new survey has revealed that the majority of fortysomethings are unaware that the age they can claim their private or workplace-based pension is set to rise from 55 to 57 in six years’ time – a significant change that could affect them.
The PMI – a body for pensions industry professionals – found that fewer than one in five of 2,000 respondents to their survey aged 40-49 were aware of the upcoming changes.
The government announced the change in 2014, but it seems little has been done to highlight it since.
PMI president Lesley Alexander told The Mail Online: “The results of this research are particularly worrying, as they suggest strongly that the Government has failed to make the general public aware of a significant change in pensions policy.”
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The increase to the pension age is further complicated because, according to the PMI, it won’t affect everyone – some private sector arrangements and those earning benefits in a public service pension scheme will still able to draw their pension at 55.
However, many workers now have a number of different pensions in different schemes, and this is likely to create further confusion when it comes to making retirement plans.
In an article for ThisIsMoney.co.uk, senior analyst at financial services firm AJ Bell Tom Belby described the change as “bonkers.” He believes changing the retirement age from 55 to 57 creates an opportunity for fraudsters because the change could create the bizarre situation where someone could have two minimum access ages – potentially even within the same scheme. Scammers could capitalise on this by offering people the ‘opportunity’ to invest with them to retain the retirement access age of 55 – only to run off with the cash.
So, what can businesses do to support their staff through these changes?
The most important thing is to make sure they’re aware of the changes. HR personnel should consider running training sessions for staff – particularly those in their 40s who will be affected by the changes – to bring them up to speed on the change in pension age and what specifically it means for them.
Reviewing your company’s pension scheme to see how it’s affected by the change is also a must.
Those who were planning on retiring at 55 may need to look at other ways of bridging the two-year gap. Ian Browne, pension expert at Quilter, told ThisIsMoney.co.uk that having savings outside of a pension wrapper, such as ISAs, may offer more flexibility. However, he warns, ‘It is illusory for most people to expect to be able to retire in their 50s unless they really have substantial private savings.’