The pensions industry faces a number of major changes in the year ahead – at a time when many savers are facing increased financial strain.
Inflation is expected to reduce slightly during 2023, however many people will find incomes further stretched with government support for energy bills due to stop in April. Most experts are anticipating only more limited help going forward, which will be targeted at just the lowest income families.
On top of this, changes announced in this Autumn’s budget will see tax bills rise for the majority of households during 2023. However, pensioners will see the biggest increase to the state pension ever, with a 10.1 per cent increase due in April.
Against this background the government is due to publish its review of state pension age in the first quarter of next year. The state pension age is currently 66 and is due to rise to 67 by 2028.
Hargreaves Lansdown senior pensions and retirement analyst Helen Morrissey says that under current plans it is due to hit 68 by 2046 though the government has stated its intention to accelerate this to 2039.
She adds that rumours suggest government wants to accelerate this further, with a move to 68 potentially happening as early as 2032. She points out though that this is likely to face opposition, particularly with longevity slowing and many people simply not able to keep working that long through ill health.
The other major change facing the industry is the introduction of pension dashboards. The timeline for this gathers pace during 2023 with the deadline for large pension providers such as master trusts to connect by the end of August.
This will be followed by money purchase schemes used for auto-enrolment by the end of September and then non-money purchase schemes. Staging is expected to continue throughout the remainder of 2023 and into 2024. Consumers are not expected to be able to use these dashboards until 2024.