Quilter has called on the government to reverse proposals to move the normal minimum pension age to 57, saying the move was complex and would do little for people's retirements.
Jon Greer, head of retirement policy at Quilter, said while he appreciated the theory behind the decision, he believes the change has been poorly considered, with limited evidence that it would alter behaviour.
In February the government announced that it plans to increase the NMPA from 55 to 57, effective from April 2028.
In its consultation document, it said increasing the minimum pension age reflected increases in longevity and changing expectations of how long people will remain in work and in retirement.
But industry experts were quick to warn against the proposal, citing the problems the change could cause.
According to Greer, data suggests that many people “cash in their pot at the earliest possible opportunity” so raising the age by two years would do little to help their retirement.
He said: “According to the latest retirement income data from the FCA, 55 per cent of pension plans accessed for the first time are withdrawn fully overall, with 75 per cent of those withdrawals done by people aged 55-64.
"Giving them an extra two years of saving isn’t going to change behaviour and will do very little for their prosperity.
“If you are worried about the longevity of people’s pension pots and people accessing their savings too early, you would not move the NMPA to 57."
Greer also questioned the government's thinking around the difference between the NMPA and state pension ages.
It was a coalition government policy in 2014 that it would be appropriate for the NMPA to be set at 10 years below state pension age.
Greer said: “The current government also made clear it sees the 10-year gap between the NMPA and state pension age as appropriate ‘in principle’, but it does not seem they are overly convinced themselves as it does not intend to link NMPA rises automatically to state pension age increases ‘at this time’."
Small pots
The government also stated that individuals with a protected pension age of 55 who wish to transfer could only retain this benefit as a result of a block transfer.
Greer believes the change may bring some unintended complexity to the DWP's efforts to help consolidate small pots.
He said the DWP’s Small Pots Working Group has done some “initial good work around the consolidation of small pension pots” but, the planned NMPA rules effectively “remove a benefit should a member wish to transfer to a more appropriate pension scheme” contravening the DWP’s work.
Greer said this risked leaving people stranded in more expensive or inflexible pensions just to safeguard the age benefit.
He said: “The pensions minister himself said ‘scheme members should benefit from an efficient, competitive and transparent workplace pensions system.
"This will continue to underpin our approach to consolidation of small pots and member protection, including charges being controlled effectively.’ As such, the NMPA rule change presents challenges that will need addressed."
