Article How to prepare your employees for a rising retirement age

The State Pension age is rising. Between 2026 and 2028, it will increase from age 66 to 67 and it’s expected to rise again to age 68 between 2044 and 2046.¹

Your employees might be feeling anxious about this uncertainty. A rising State Pension age may have a financial impact and could affect how long they plan to continue working, as well as other retirement goals. 

Here’s why the State Pension age is rising, as well as some tips on how you can prepare your employees for a rising retirement age.

Why is the State Pension age rising?

As part of the government’s commitment to the triple lock (a safeguard that makes sure the State Pension doesn’t lose value because of inflation), the State Pension rose by 10.1% on 6 April 2023.² This means the new full weekly State Pension amount has increased from £185.15 to £203.85.²

The State Pension is the single biggest welfare cost to the Treasury. It’s projected to hit £124 billion for the 2023/24 tax year and will likely grow even higher now the 10.1% increase has taken effect.³ The cost of the government’s  bill is likely to be so big because of the increase in life expectancy over the past few decades, meaning people are being paid their State Pension for longer. The average life expectancy for a 65-year-old man is now 83.5 years, and 86 for a 65-year-old woman.⁴

What does a rising State Pension age mean for your employees?

A rising State Pension age means many of your employees might get their pension later than they expected. If they’re relying on this to top up their income in retirement, it could mean their finances fall short and force them into working for longer than intended. The increase in State Pension age is taking a phased approach between 2026 and 2028. Your employees can check when they’ll be entitled to the State Pension by using the government’s State Pension age calculator.

It's not just the State Pension that’s rising. The age at which your employees can access their workplace pension is also on the up. The current minimum age to access a workplace pension is 55 (minus a few exceptions noted on the GOV.UK website, for example, if they're in poor health) – this is rising to 57 from 2028.⁵

Because of the changes, some of your employees may be rethinking their retirement plans. Outside of working for longer, they may be trying to save more, or generate other sources of income until they can access their pensions.

How to help your employees prepare for a rising retirement age

Working for longer can be beneficial for both your employees and for you as their employer. They benefit from extra income to support them until they qualify for the State Pension. And you benefit by retaining older, more experienced employees, which could potentially save you money on hiring and training costs.

However, if your employees aren’t aware of the changes to the State Pension age, this could cause some distress if their plans are forced to change unexpectedly. Here are some ways you can support and help them prepare for the changes.

1. Explain the changes

To help employees understand the changes, and to address any concerns they may have, you could create a bespoke communications strategy around the rising State Pension age. For example:

• Contacting employees as they near retirement age, to detail the changes.
• Source documentation that explains the rules and direct them to the government’s Check your State Pension age calculator.
• Run video and face-to-face Q&As on pensions and the rising pension age. The aim should be to reduce the complexity and empower employees.
• Use sources available to share with them or to help guide your communications, such as the government’s State Pension webpage.

2. Consider financial wellbeing in your approach

Financial wellbeing refers to how people feel about money, how they manage their finances, whether they feel in control, and how they can use their money to achieve their goals.

A big change like the State Pension age going up could impact your employees’ financial wellbeing. To help, you could consider:

Offering financial coaching as an employee benefit. This could help your employees better manage their money to reach their goals.

Provide a ‘mid-life MOT’ to help your employees review their personal finances and plans for later life.

Direct them towards our Financial wellbeing tool, which provides a tailored package of articles, resources, videos, and podcasts.

3. Signpost resources

There are plenty of free resources around that can help with pension matters, some even offer personalised guidance. You could bring their attention to helpful resources, such as:

• The government's retirement income planner.
• MoneyHelper, a website that brings together the support and services of three government-backed financial guidance providers – these include the Money Advice Service, the Pensions Advisory Service and Pension Wise.
• Pension Wise, a free service from MoneyHelper which offers guidance specifically for those over the age of 50.   

4. Highlight relevant policies and benefits

If you have company policies and benefits that may be relevant to your  employees who are thinking about or nearing retirement,, make sure to communicate these effectively. Knowing the benefits and options available could help them to plan their future. For example, they might choose to reduce their hours and plan for a phased retirement as they wait for their State Pension.

For example, you could direct them to:   

• Your part-time and flexible working policies. This might take into account situations like juggling work while caring for elderly parents, looking after grandchildren, or managing health conditions.
• Any private healthcare provision that particularly benefits mature employees, such as menopause support and cancer screenings.
• Your community for older workers, such as any sociable groups that also serves as a place to network and connect over shared interests. 

Give employees the right support

By taking these simple steps, your employees should feel better prepared for a rising State Pension age – and any changes the government may announce in the future. You can help them become more in control of their finances and retirement goals, potentially leading them to greater financial wellbeing.