Seven out of 10 adults are unaware that the age at which they can access their pension will increase in the near future.
From 2028 savers will have to be 57 before they can access their pension savings. Currently these can be accessed at 55. But research by Aegon found 68 per cent of adults were completely unaware of these changes.
Aegon says this lack of awareness could have an impact those now planning their financial future.
Under current proposals individuals may be able to keep their access age at 55 in their current scheme, but Aegon says this could discourage many people from transferring to better value pensions.
This is backed by this research which shows 44 per cent of of adults aged 35-54 — the first age group who’ll be hit by the proposed changes — would be put off transferring to a better value scheme if doing so meant they lost their right to take their pension from age 55.
Under current Treasury proposals on how to implement the increase it says individuals already in a scheme with an ‘unqualified right’ to take benefits from age 55 should retain this access.
But those joining a new scheme after 11 February this year (2021) won’t gain access after April 2028 until the age 57. In a further complication, those transferring from an existing to a new scheme will also lose the right to access before age 57 unless they are transferring on a scheme wide ‘block’ basis.
The industry is still waiting for final details from the Treasury on how this transition will work.
The research shows there is a good understanding of the current normal minimum pension age amongst adults. Eight out of 10 (83 per cent) of those surveyed were aware there’s a minimum age to access a pension, with high scores across all age bands including 18 to 34-year-olds.
Two thirds (64 per cent) also correctly identified age 55 as the current minimum.
Steven Cameron, pensions director at Aegon says: “The government’s intention behind increasing the normal minimum pension age from 55 to 57 is to encourage more people to work longer and to save sufficiently for retirement. As people on average are living longer, this has merit, but people need to know about the change well in advance.
“Although the number of people who access their pension at age 55 is relatively small, any increase to the minimum age must be communicated widely and well in advance of April 2028, so that people who are planning ahead aren’t left disappointed. The research shows that most people are unaware of the change and it’s something both Government and the pensions industry needs to highlight without delay.
“Furthermore, the proposals on how to introduce the increased minimum access age present a number of challenges and complexities. Our research confirms our fears that individuals might shun transferring from their current pension scheme if they lose their right to access their pension from age 55. There are many situations where people might benefit from transferring to a new pension, including moving from schemes with higher charges, less flexibility or poorer investment choices. Choosing to ‘stay put’ on the slim chance you might want to access your pension from age 55 could have a big and damaging impact on retirement outcomes.”
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