Early-retirement wannabe

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  • amateur_house
    amateur_house Posts: 276 Forumite
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    lisyloo wrote: »
    Andy1977 - I realise things do change, but at the moment it's looking like it will be 57 for you and not 55.

    Are there plans to raise the age you can take a 25% lump sum from your pension? This is something I am planning to do in the next 2-3 years with the aim of paying off a chunk of my mortgage. I've not read anything about this change. No plans to retire early, I am just lurking on this thread.
  • gallygirl
    gallygirl Posts: 17,228 Forumite
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    amateur_house wrote: »
    Are there plans to raise the age you can take a 25% lump sum from your pension? This is something I am planning to do in the next 2-3 years with the aim of paying off a chunk of my mortgage. I've not read anything about this change. No plans to retire early, I am just lurking on this thread.
    I think there is talk of linking it to 10 years less than the state retirement age. Ive just turned 55 and I'm taking my 25% now in case the rules change in the next year of so.
    A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort
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    "Do what others won't early in life so you can do what others can't later in life"
  • hugheskevi
    hugheskevi Posts: 3,861 Forumite
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    edited 9 October 2016 at 11:57AM
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    Are there plans to raise the age you can take a 25% lump sum from your pension?

    Under the Coalition govt back in July 2014, HM Treasury announced in a response to a consultation that minimum pension age would be linked to state pension age minus 10 years. It was stated that the change would be legislated for at a later date, which still has not happened.

    The consultation stated that the change would apply from when the State Pension age reached 67 in 2028. however, the lack of legislation means many details are left unanswered. The key outstanding questions are:
    • Does the current government (which being a Conservative majority is a completely different government to that which made the decision to increase minimum pension age) intend to enact the policy change announced in the Coalition consultation response? As well as being a completely different government there are now many different priorities.
    • If the change is legislated for, will the shorter time to the change taking effect mean the delay is put back to give people adequate notice to change their plans?
    • Will the increase be a cliff-edge in 2028, or will the increase be tapered in, eg, starting in 2024, aligning with state pension age in 2026 and then tracking with the state pension age increase to 67 by 2028. In the original consultation is was stated "The transition to this age will need to begin before 2028 and the government will provide further detail on this in its summary of responses to
      this consultation      " However, there was no mention of this in the consultation response.
    • Will protection be given, as it was when minimum pension age last increased in 2010, for those with existing pension arrangements at a particular date?
  • atush
    atush Posts: 18,726 Forumite
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    amateur_house wrote: »
    Are there plans to raise the age you can take a 25% lump sum from your pension? This is something I am planning to do in the next 2-3 years with the aim of paying off a chunk of my mortgage. I've not read anything about this change. No plans to retire early, I am just lurking on this thread.

    I have no doubt this will eventually happen, but hasnt yet.


    Add in that it will be announced beforehand, so you would not be disadvantaged if you were just a year or two away.

    I'd make plans, incl using S&S isas, for it to be around 58+
  • amateur_house
    amateur_house Posts: 276 Forumite
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    Thanks for the replies, it doesn't sound like it's imminent so hopefully won't kick in within the next 3 years. If it's raised after that hopefully it will be tapered so my age will increase in line with it.
  • atush
    atush Posts: 18,726 Forumite
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    Pretty sure govt (at least the tories dont know about the corbinistas?) have vowed that future changes will be announced 10 years before action?
  • ex-pat_scot
    ex-pat_scot Posts: 693 Forumite
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    It's one of the things that might derail my plans.

    I have 7.5 years before I hit 55 and can first access my money.
    I might have enough by then. I have little certainty over my pot value, cash requirements and work situation in 2024. But what I would really like is certainty over the options available. I believe the general message touted was that 55 was far too young to be thinking of stopping work, because people still have lots of energy and things to offer. Stuff that! If I deem I have sufficient to support myself, then it should matter not whether I choose to withdraw at 50, 55, 60 or whenever. (yes i will still need to be prudent, but frankly I've already demonstrated that by accumulating).
    It's a different story to the SPA. I am fully on board with setting the SPA at a level where it becomes difficult to expect people to work fully effectively.

    My other big risk to current plans is the spectre of flat rate relief. That's another story entirely.

    The third traditional risk would be over the 25% tax free element of pension funds - but if this is restricted, i would expect that it would be so for fresh funds, as existing funds have been accumulated under the expectation of the relief.

    The fourth risk would be a further reduction to the lifetime limit. Frankly this is quite possible, and my response would be to work until i have the max allowed pot and thereafter stop. A bit like some (GPs) are doing with the new £1m level today, apparently.
    I feel the the whole notion of LTA is plain bonkers. It has no place alongside annual allowance limits, as it unneccesarily introduces risk (I have no idea on future performance and projected pot values, in spite of fairly clever cashflow and investment return modelling).
  • Karmacat
    Karmacat Posts: 39,460 Forumite
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    ex-pat_scot wrote: »
    The third traditional risk would be over the 25% tax free element of pension funds - but if this is restricted, i would expect that it would be so for fresh funds, as existing funds have been accumulated under the expectation of the relief.
    Expectations about pension rules and situations have been continually upset over the last 17 years or so, it would be nice to have your expectations met, but don't count on it, seriously.
    2023: the year I get to buy a car
  • westv
    westv Posts: 6,085 Forumite
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    Haven't the positives slightly outweighed the negatives over those 17 years??
  • Karmacat
    Karmacat Posts: 39,460 Forumite
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    Erm, about the state pension? What positives, I can't think of any?
    2023: the year I get to buy a car
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