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Employee Benefits Advice for Corporate Clients

Changes to State Pension Ages – what does this mean for you and your employees?

The Government recently announced that they plan to increase the State Pension Age earlier than originally proposed which means that all employees born between 1970 and 1978 will have to work a year longer, until age 68, before receiving their State Pension.

The State Pension Age is currently 65 for men and it is gradually increasing for women – it was 63 and nine months in April 2017, and will be 64 and six months by April 2018.

From 2019, the State Pension age will start to increase for both men and women to reach 66 by 2020 and then 67 by 2028.  The new change will be phased in between 2037 and 2039.

From an employee’s point of view this obviously means that they have to wait longer to receive their State Pension however this could also have an impact on when they are able to draw benefits from their private pension arrangements.  Under current legislation, individuals can access their private pensions from age 55 however, we expect, although there is no legislation in place yet, that the 10 year difference between State Pension Age and the ability to access private pensions will be maintained.  This will mean that as State Pension Ages rise so will the minimum age for drawing benefits from private pensions.

With Age Discrimination legislation removing retirement ages, the need for employees to receive information, guidance and ultimately advice around their pension planning is now even more in focus, as they will have to work longer before receiving their State Pension.

From an employer’s viewpoint, there will be an impact on both Group Life and Group Income Protection schemes especially where these schemes have fixed end dates i.e. the employees 65th birthday.  This means for a Group Income Protection Scheme that there will be a gap between the benefits ceasing and the employee being able to claim their State Pension.  If your scheme hasn’t amended the end date of the policy, this should be reviewed.

Please contact Richard Haynes, Head of Employee Benefits or your usual consultant for more information or help in this area.

Based on our understanding of tax and employment law as at June 2018.  Information provided does not constitute financial advice. 

Sanlam is a trading name of Sanlam Wealth Planning UK Ltd (Reg. in England and Wales 3879955) and English Mutual Ltd (Reg. in England and Wales 6685913). English Mutual Ltd is an appointed representative of Sanlam Wealth Planning UK Ltd which is authorised and regulated by the Financial Conduct Authority.

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