The Treasury has published a consultation, Increasing the Normal Minimum Pension Age (NMPA), which confirms plans to raise the NMPA from 55 to 57 years by 2028 to reflect changes to the minimum state pension age.
The document, published yesterday (11 February), stated: “The government believes that increasing the minimum pension age reflects increases in longevity and changing expectations of how long people will remain in work and in retirement.”
The proposals exclude members of the firefighters, police and armed forces public service pension schemes would not be affected by the change, it added.
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The consultation, which closes on 22 April 2021 at 11am, also seeks views on the proposed protection regime for members of other pension schemes.
However, the Chartered Institute of Personnel and Development (CIPD) is calling on the government to review the move to take into consideration the impact of Covid-19 (Coronavirus) on the economy. It claimed workers most affected by the pandemic could face real hardship.
Charles Cotton, CIPD senior reward and performance adviser, said: “The government should be prepared to review this decision nearer to 2028. Within the next few years, we will be in a better position to assess how the economy has bounced back from the impact of the Coronavirus and Brexit’s teething problems.
“If the over 55s are struggling in the jobs market, then some might need to access their pension posts as soon as they can. In which case, it might be wise to postpone the increase. However, if the economy and the job market is powering ahead then older workers will not need to access their pension pots and the increase to 57 can go ahead.
Cotton also called for employees to be made aware of the consequences of accessing their pensions as early as they can.
“For instance, in future instead of being taxed if they pay in more than £40,000 a year they’ll be taxed if they put in more than £4,000. Similarly, the longer they leave their pension untouched, the more it could potentially be worth,” he added.
Michael Ambery, partner at Hymans Robertson, echoed Cotton’s concerns.
“If there are changes, as proposed in this consultation, integrating retirement age and adequacy and communicating this clearly to members, will be key to ensure that any change legislation is understood and made appropriate for the individual investor.
“Focus should be on how providers of pensions and corporates deliver the changes through pension scheme design and via member engagement and or wellbeing.”