May Pensions Bulletin 2025
Posted on:
Increase in the National Minimum Pension Age
The Pensions Administration Standards Association (PASA) has published guidance on preparing for the change to normal minimum pension age (NMPA) ahead of the increase to age 57 from 6 April 2028.
The NMPA, which is the earliest age people can access their benefits from a registered pension scheme without incurring tax charges, rose to age 55 in 2010 and is set to rise again to age 57 from 6 April 2028.
Whilst this is three and a half years away, trustees and administrators should take action now to prepare for the change and ensure people with a Protected Pension Age (PPA)* are treated fairly and are given clear information about how the changes may impact their retirement plans.
Pension schemes should also review scheme rules and booklets to include updated information on the NMPA and identify any implications for benefits. Schemes may also want to consider a communication exercise to notify those directly affected and provide information on how the changes may impact their retirement plans and any available options.
*Protected Pension Age (PPA)
Many GMB members, especially those working in the Public Sector, will have a PPA as the scheme they are in gives them an unqualified right to take benefits before 57 and has done so since at least 11 February 2021.
PPAs only apply to people who joined schemes (not necessarily the current scheme) with unqualified PPA rights before 4 November 2021.
PASA’s guidance can be found here
Increase in State Pension Age
More pressing is the change in state pension age. The UK State Pension age is currently 66 for both men and women. It will increase to 67 between April 2026 and March 2028. For those born on or after April 5, 1960, the State Pension age will rise to 67. GMB is opposed to any further increases.
A Decade of Pension Freedoms
Ten years ago, the Government implemented its freedom and choice pension reforms, giving individuals greater choice and flexibility in how they can access pension benefits, including their Defined Contribution (DC) pension pots.
To mark the ten-year anniversary of the reforms, the Institute and Faculty of Actuaries (IFoA) has conducted research into public attitudes to the reforms, and the extent to which individuals are aware of, and confident in using, the freedoms. The IFoA remains concerned that many UK households are not saving enough for later life, are not accessing free guidance or paid-for financial advice and remain ill-equipped to deal with the risk of running out of money in retirement.
Their findings include:
- Many people retire without either taking guidance or seeking advice – only one in five accessed government guidance such as Pension Wise.
- Almost one in four people worry that they will make the wrong decision and run out of money in retirement.
- Many people have only a limited understanding of the factors that impinge on retirement savings decisions.
Small pots to be consolidated
The Government says the UK now has 13 million small pension pots – defined as being worth £1,000 or less – and has announced reforms to consolidate them. They hope the move will boost retirement savings for the average worker by around £1000 and save businesses £225 million a year in admin costs.
Under the reforms, each saver’s small pension pots will be consolidated into a single pot, within a scheme that is certified as delivering good value to savers. The proposal comes with safeguards for savers whose pension pots would be consolidated, including options to opt out.