‘Further confusion over pensions must be avoided at all costs’
14th September 2021 11:52
by Rebecca O'Connor from interactive investor
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interactive investor comments on ABI calls for simplicity on Normal Minimum Pension Age Changes.
In response to a call from the Association of British Insurers (ABI) for everyone to have access to their pension from 57 from 2028, following the rise to the Normal Minimum Pension Age (NMPA), rather than allowing a protected age of 55 for some schemes, Becky O’Connor, Head of Pensions and Savings, interactive investor, the DIY pension platform, said: “The complexity of pensions is already massively off-putting for people and can lead to imperfect decision-making with negative consequences. Further confusion must be avoided at all costs.”
“If the minimum pension age is rising to 57, it should rise to 57 for near enough everyone with a pension. Any exceptions should be minimal, for instance where the nature of the occupation might require earlier access.
“As things stand, with some large schemes having 55 written into the rules rather than ‘NMPA’, at whatever age that is, you could have a big proportion of the working population accessing their pension at 55 rather than 57, despite the general change to the NMPA. Those wanting access to their pension as early as possible could well end up moving to a scheme with a minimum age of 55 rather than 57. If it becomes possible for people to apply for a minimum pension age of 55 rather than 57, this could make things even tricker to administer.
“It’s really important the government takes on board this feedback as the risk of confusion, as well as behaviour change that could worsen retirement outcomes for some, is real.
“The communications challenge for the pensions industry of yet more multi-level, conditional rules that apply to some and not others would be significant.”
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