The minimum pension age for accessing workplace and personal retirement savings is set to go up from 55 to 57 in 2028 – a change that could have a big impact on people’s retirement planning decisions.
But a new study has found that less than one in five people in their 40s are actually aware of this upcoming change.
Figures from the Pensions Management Institute (PMI) also show that just four per cent of people in their 40s actually know that the current minimum age for accessing private pensions is 55.
So what does this mean? Firstly, the findings suggest that many people in their 40s lack basic knowledge about the pensions rules, and secondly, that many could be caught out when they turn 55 and find that they can’t access their private pensions.
As the PMI warns, many people seeking to draw benefits as soon as they can “may be shocked to learn that they will have to wait”.
To make the situation even more complicated is the fact that the changes won’t apply to everyone.
The PMI points out that members of some private sector schemes and those who are paying into public service pension plans will continue to have a pension age of 55 after 2028.
Responding to the PMI’s concerns, a government spokesperson said the change in the normal minimum pension age to 57 was announced in 2014.
This, they said, was 14 years in advance of the change and “gave people time to make financial plans”.
However, it is clear that a significant proportion of the general public are not aware of this major change in pensions policy, which President of the PMI Lesley Alexander believes is “particularly worrying”.
“It is vital that the general public understands clearly what their retirement choices are,” she said.
The PMI has called on the government to launch a new communication programme as a matter of urgency, so the situation is clearly explained to the wider public.
Ms Alexander added that this needs to happen before the pensions dashboard, giving people the facility to view all their pension savings in one place, is introduced in 2023.
Otherwise, she believes there will be widespread confusion “when people learn that they will become eligible to draw benefits at different ages”.
The government has described the introduction of the pensions dashboard as a step that will revolutionise how consumers keep track of their pension information, as it will put the saver “more in control” and transform “how they think and plan for their retirement”.
However, the widespread lack of awareness of upcoming changes to pension policy suggests a problem is looming, and points to why it’s so important to get financial advice from an experienced, qualified specialist who is closely following regulatory and policy changes.