Yahoo Finance Pensions minister calls for mid-life MOTs and more pension tax breaks
Businesses could get tax breaks for offering midlife MOTs for staff, as the increasing life expectancy in the UK puts a strain on pension schemes.
Midlife MOTs are aimed at people in their 40s, 50s and 60s to help them review their lives in terms of work, wealth and wellbeing.
The government wants to encourage employers to conduct workplace midlife MOTs and today pensions minister Guy Opperman suggested a future scheme to offer businesses tax breaks if they facilitate the initiative.
Read more: UK pensions dashboard: What is it and when will the tool be available?
Speaking on Wednesday at a Work and Pensions Committee in the Houses of Parliament, Opperman stressed a key benefit of a midlife MOT is to give "people a better understanding of what they have got, or what they don't have, so they can then change their behaviour".
By the mid-2030s half of all UK adults will be over 50 and this ageing of the population is placing a strain on both state and private pension providers.
Because of the demographic changes in society, the government has initiated its midlife MOT scheme to encourage employers to retain and retrain older workers and help people over 40 to plan for a more sustainable retirement.
Opperman added that there is an ongoing discussion between the Department of Work and Pensions (DWP) and the UK Treasury about how to incentivise businesses to offer midlife MOTs for their staff.
The pensions minister said: "Midlife MOT is the key intervention for me, such as a big intervention before the age of 50. We need to incentivise businesses to offer midlife MOTs. You could for example offer a tax break for those businesses that offer a midlife MOT. This could be a deduction of a business's corporation tax."
Read more: British Airways flight cancellations: What you need to know
Apart from navigating employees to the government's current online service, the DWP offers toolkits for larger and smaller employers alongside a business guidance pack that details how to incorporate a midlife MOT in the workplace.
The minister for pensions and financial inclusion added that there is government support for workplace midlife MOTs and for helping employers recruit inclusively.
Employers could facilitate managed conversations with staff, or hold seminars and workshops to help employees gain clarity and confidence about how to shape their future at work, and their plans for retirement.
The overall aim of the government initiative is to get both employees and employers to make choices that will ensure people prepare for the best possible future retirement.
Opperman hailed midlife MOTs as a way to ensure people have a sufficient retirement package and the MP said it would help people to enact the behaviour changes needed to ensure a more sustainable retirement.
Many changes can be enacted, such as raising a person's pension contributions if you have National Insurance gaps. A person can also consolidate all of their pensions into one pot to take care of costs and charges in a particular way.
Opperman said he wants to get people much more involved in their pension at a much earlier age and midlife MOTs are a scheme that could assist in raising retirement awareness at a younger age. Speaking at the select committee meeting he said that the government "needs to engage people about savings and pensions on a long-term basis".
Referring to Australia's automatic pension enrolment policy, he added: "We need to follow the Australian example, which began automatic enrolment 25 years ago, whereas the UK only started 10 years ago, and I would have liked the UK to have begun auto-enrolment much earlier than this."
Data from the Office of National Statistics (ONS) shows that in 1900 a baby boy had a 3% chance of surviving until age 90, but in 2020 they have a 54.3% chance.
The ONS data also shows that in 1900 a baby girl would have a 10.3% chance of surviving until age 90, now she has a 63.8% chance.
In reference to the UK's ageing population, Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown said: “Life expectancy increases are slowing but still growing and this is giving government headaches as to the future pace of state pension age increases. State pension age has climbed rapidly as life expectancy soared with state pension age due to hit 67 in 2028 and a potential acceleration in the date at which it hits 68 currently the subject of a government review. "However, the effect of the pandemic has caused government to take pause, we can’t take these huge increases in life expectancy for granted and the accelerated increase to age 68, once seen as very likely, is more in the balance. Added to this is the issue of healthy life expectancy, we may be living longer, but we aren’t necessarily living all that time in a healthy state and so we cannot assume people will be able to work until their late 60s before receiving their state pension. It is a tricky balancing act as the government mulls how to meet the needs of an increasingly ageing population without overly burdening those in work.”
Watch: When should I start paying into a pension?
