Will the age that private pensions can be accessed at ever change?

[Deleted User]

I believe the current age at which a private pension can be accessed is 55 but I can't find any information on if this is guaranteed to be the same for everyone in the future?

Does the state pension age increase have any bearing on the earliest age at which a private pension can be accessed, or can I confidently assume that I will be able to access my pension (as a 21 year old) at 55?

Thanks,

jamesd

The minimum age increased from 50 to 55 from 6 April 2010. It certainly can increase again but with that recent change I hope it's not going to be increasing for many years. The notice for that change was grossly inadequate, being less than a year.

As a 21 year old you cannot confidently assume that you will be able to access your pension at 55. I assume that there will be at least one increase in the next 24 years.

You may be able to handle this by using some investing within a stocks and shares ISA and using that money to cover the gap between when you want the pension money and when you can get it.

If your plan is to use the pension lump sum to pay off a mortgage you can either get a mortgage with a longer term at the beginning or remortgage to keep the term later than any likely change.

CLAPTON

The change from 50 to 55 was one of the more outrageous actions of this government.

There seems to be no logical or economic reason to changed self funded private contracts in this way; except of course to bring the private pensioners in line with the changes to public sector pensions.

Quite amazing how little outcry there was except that most people only get to understand pensions just before they start to take them.

JethroUK

citricsquid wrote: »

I believe the current age at which a private pension can be accessed is 55 but I can't find any information on if this is guaranteed to be the same for everyone in the future?

Does the state pension age increase have any bearing on the earliest age at which a private pension can be accessed, or can I confidently assume that I will be able to access my pension (as a 21 year old) at 55?

Thanks,

I suppose its easy to fall into the trap that "a pension" is just "another" wacky savings scheme but with more hurdles/obstructions in the way in exchange for better terms

it ain't

a pensions primary purpose is to fund you from the day you retire until you are dead

and that is why the government encourage you to get one in the form of tax benefits

people are likely to live longer and because of that you will more than likely find "government pension schemes" mature later rather than earlier

if you have other short term ideas on savings and investment then a pension is not for you

rpc

CLAPTON wrote: »

The change from 50 to 55 was one of the more outrageous actions of this government.

How can you blame this government for something that came into effect before they were elected?

kidmugsy

rpc wrote: »

How can you blame this government for something that came into effect before they were elected?

Just do it on autopilot.

atush

Take some comfort int he fact that, as a 21 yr old today you may find your are too young to retire at 55, as you will feel probably like a 45 yr old feels today :beer:

As an example, my OH was over 50 when the changes came in, and could have taken one or more of his PPensions early. But we knew that age 50 was too early for us to retire, and you may feel tht way at 55/

Rich1976

I posted a similar question the other day and it does seem extremely unlikely to me that at the age of 36 I would be able to even take my personal pension at 65 never mind 55.

I suppose it is possible that as people live longer and if annuities keep going down to such a rate where it isn't possible to retire on a minisule amount the insurance industry/government may decide to increase the age from 55. If people are going to have to work until 67 and beyond to claim the state pension there can't be that many people who can afford to retire without having the state pension as an additional income.

I know people don't have to use annuities but from what I understand the other option is drawdown which is currently only possible for high value pensions.

jamesd

Drawdown is possible for amounts as low as a few tens of thousands in a pension pot. The costs have fallen greatly.

The bigger issue is having enough certain income to be able to deal with the variations in income and the capital value variations along the way. Two or three years worth of planned investment income in a savings account can handle some risks, the main short to medium term ones being the GAD limit recalculation every few years (based on capital value, not income) and variation in income (likely to be substantially lower than GAD limit variations). Longer term there's a need not to draw more than the pot can sustain. Though withdrawing the maximum and reinvesting it increases the reliability of drawdown because the money taken but not spent is additional cushioning against GAD limit changes and legislative risk.

Beyond that it's really up to people to choose their financial priorities. Some just don't make enough to have much choice but others can choose to spend less today to retire earlier if they want to. It's much easier if it starts early because there are many more years of compounded growth to help that way.

The biggest issue then is having enough in the various savings and investment pots to be able to afford it. Most people won't have put away enough to retire at 55 even if they dream of it. With state pension age more than ten years away it's a tough target to do it that early. Those with sufficient incomes who really set about doing it, will have a good chance of achieving it, but it does take quite a high income and commitment, preferably accompanied by a young starting age.

stinktankcynic

The financial industry is in it to make a profit. The government will do anything to get money from the middle band of society. Taking this into account the government can, if they wish.....

Increase state pension age to 70, 75 etc.
Increase pension taking age to 60 or state pension age.
Remove the tax free lump sum.
Take a levy out of pension funds to pay for old age care.
Means test state pension against any private pension or savings.
The tax rate can change or merge with ni.
Annuity rates may be poor long term.. Life expectancy.. Etc.

Against this you have the benefit of tax relief. Your money is tied up for years, more difficult to sell high and buy low, inflexible.

40% taxpayer with employer contributions or final salary scheme membership seems a far better deal than basic rate stakeholder pensions.

The industry and government wants you to save, reduces state support in further years, profits for firms. The governments answer is auto nest pensions etc, the firms scare stories about poverty in retirement in the media.

Most sensible people want to do the right thing... Trouble is, there are too many if's.

For some, isa's are more flexible. Perhaps with additional pension con's nearer retirement when there is more certainty.

jamesd

The government can also abolish ISA tax relief, introduce a tax on ISAs or do other things that harm them. Same for residential property, perhaps introduce another property tax on top of council tax and a surcharge on high value homes.