A look back at the pension year that was

interactive investor's Alice Guy analyses another year of moving goalposts for those saving money for their retirement.

For anyone looking to build up a pot of money for their retirement, 2022 was another year of moving goalposts. The minimum age at which private pension savings can be accessed is increasing to 57 in 2028, to coincide with the state pension age increasing to 67 in the same year. The government has also confirmed it will be publishing in early 2023 the results of a review of the state pension age. Many now expect the further increase to age 68 to happen sooner than currently planned by 2039. This would have the effect of forcing millions to wait another year or two before receiving their state pension. 

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Set against these delays, was the welcome news the government is sticking by the triple lock mechanism for increasing the state pension, at least for another year.

Plans to implement Pension Dashboards have progressed well and these will now start to become available from 2023, giving savers a one-stop shop where they can track all their old pensions in one place. This will be an important tool for anyone wanting to take control of their retirement saving, by  consolidating multiple pension pots into one account.

Questions have been asked about how well workplace pensions are delivering for their members, with plans now in train to loosen the cap on charges. This is intended to allow pension schemes more freedom to invest in long-term projects such as infrastructure construction. The government is also reviewing how well schemes deliver value for money, looking at charges, investment returns and member engagement. Again, we’ll be hearing more about this as we go into 2023.

The various regulatory bodies have continued to push for better accountability from pensions on how they meet ESG targets. Better measuring and reporting standards are being introduced, as well as increasing focus on the stewardship exercised by pension investors over the companies they hold in their investment funds.

Pensions briefly made front-page news, as Liz Truss’ mini budget sent interest rates up, forcing the Bank of England to step in and buy up assets from distressed final salary pension schemes. Generally, pensions shouldn’t be front-page news and when they are it is often for the wrong reasons. Fortunately, the crisis was short-lived, order was restored and no lasting harm appears to have been done. It is also worth noting in passing, the pension lifeboat scheme, the Pension Protection Fund is well capitalised and stands behind these final salary schemes, ready to step in if any of them do get into difficulties.

The dog that didn’t bark this year was any major changes to pension tax reliefs. Instead, the chancellor is relying on freezing allowances, known as fiscal drag, to slowly erode the amounts that can benefit from pensions’ generous tax breaks. Nevertheless, further cuts to pension allowances remain a distinct possibility for the future; it makes sense to save as much as possible within the limits of the current rules.