In amongst the whirlwind of news about COVID-19 and Brexit, there was an announcement in September that could have a direct impact on your employees’ long-term savings plans.

In September 2020 the Secretary to the Treasury, John Glen, stated the government’s intention for the minimum age individuals can access registered pension scheme benefits to change in 2028.

Whereas the Minimum Pensions Age (MPA) is currently 55, it is scheduled to rise to 57 in eight years’ time.

This change will align with a further planned rise to the State Pension Age (SPA), which will move to 67 in 2028.

Why is the MPA changing?

Quite simply, many of us are living longer.

The Government has been vocal about adapting legislation to reflect trends in longevity and this is one way of meeting that objective. As many of us live to a greater age, we are likely to be working for more years and needing to save for a longer retirement.

What should employers consider?

Although the planned change to the MPA has been announced, it has not yet been finalised. Once the rise in MPA has been legislated, employers will be able to communicate the change to staff with certainty.

We believe that the key consideration employers should have when communicating the change to the MPA age is timing. With eight years to go until the MPA change is currently planned to come into effect, employers should have a significant window to manage employees’ expectations (although of course this depends on when the change is approved by Parliament).

Once the date is confirmed, notifying employees of the upcoming change in plenty of time will allow them to plan their long-term savings in line with the most up to date information, so they can engage with their pension with confidence.

As Punter Southall Aspire continues to monitor the latest updates, we will keep you updated on any legislative changes that arise so that you can communicate with your employees effectively.

In the meantime, if you are unsure of how the change in MPA may affect your staff’s long-term savings plans, please contact us.

Posted by Harri Mead

Topics: Retirement, Retirement Planning

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