The Government has proposed to accelerate the increase to 68 from 2039, but this is subject to life expectancy statistics and is not set in stone. There is certainly uncertainty over when the State Pension will be paid therefore we look at the impact on the workforce.
Employees close to retiring will be mostly unaffected by the changes. However, younger employees will need to be communicated to about the new era of uncertainty that faces them.
Those employees more than 10 years away from pension age need to know that their state pension age is no longer fixed and can change through their working life. This will place even more focus on what their pension pots at retirement need to be. When you add in we are living longer and retirement money therefore needs to last longer – there’s even less clarity for employees.
Simply keeping up to date with state pension age changes can be easy. But, if employees want to retire before the state pension age, they need their workplace pension to make up any shortfall. For employers it’s about ensuring employees are engaged with their workplace pension leading up to retirement and not just at the point of retirement.
For those with sufficient accumulated wealth the state pension becomes less important. But for the younger generations or low earners, who are likely to rely on the state pension, it means saving more and earlier becomes even more important. And the employer plays a key role in highlighting the benefits to employees.
Our retirement planning tool can help take some the uncertainty out for your employees. By providing an idea of expected income at retirement, some personal details, we'll give your employees an idea of their progress. But should your employees feel the need for help they can also speak to a financial advisor.
We have also a range of additional tools that can help your employees make decisions about their pensions plan.