All change for the pension age?

The UK no longer has a default retirement age, with individuals able to choose when they retire.  However, we do have to reach a certain age before we can access our workplace or personal pensions – that’s the normal minimum pension age – and we also have to be a certain age before we can start claiming the State Pension.

Over the next few years it is likely that we will see changes to both of these ages, one of which we have a degree of certainty about, but we will just have to wait and see about the other.

Increase to the normal minimum pension age
The normal minimum pension age (NMPA) is the earliest age from which an individual can draw their workplace or personal pension, other than on ill-health grounds or where they have a ‘protected pension age.’ It is separate from the State Pension age, which is the earliest age an individual can draw their State Pension.

The NMPA is currently set at age 55, however if the Finance Bill, which is working its way through Parliament, receives Royal Assent, the NMPA will increase from 55 to 57 from April 2028.

Members of the firefighters, police and armed forces public service schemes will be exempt from this increase.

State Pension age review
The State Pension age is 66 but is due to increase to 67 between 2026 and 2028, with a further planned pension age increase to 68 years scheduled to take place between 2044 and 2046. However, a government review, currently underway, is expected to recommend changes to these dates.

The Pensions Act 2014 requires the government to review the State Pension age every six years, the most recent review launched in December 2021 and must publish results by May 2023.

This latest review has been asked to consider whether the increase to age 68 should be brought forward to 2037-39 and will:

• Examine the implications of the latest life expectancy data
• Provide a balanced assessment of the costs of an ageing population and future State Pension expenditure
• Consider labour market changes and people’s ability and opportunities to work over State Pension age
• Develop options for setting the legislative timetable for State Pension age that are transparent and fair

There is speculation that, given the huge levels of public spending during the COVID -19 pandemic, it may be that the increase to age 68 will take place sooner, perhaps as early as 2031. However,  new figures from the Office for National Statistics (ONS), based on 2020 population data, show that life expectancy has gone down for both men and women, which has led some to suggest that the increase to age 68 may be delayed. I for one will be awaiting the outcome of this review with interest.

Photo by Joe Hepburn on Unsplash