Rise in retirement age to 57 in 2028

rinkydinkpanther

Hello. I've read about this change, but can't work out precisely what it means.

I will be 55 in January 2028, and Mr Rinkydinkpanther will be 55 in February 2028. We were both planning to retire at 55, but now the minimum age for pensions is rising to 57 in 2028. But when in 2028?

Is it certain that we will be affected? Or is there any chance that this might not come until 5 April 2028? (crosses fingers)

atush

probably April but who knows.

As an aside, LE will probably keep rising for a bit ifg more slowly, and you may not want to retire then and spend 40 years being retired?

In any case, nothing to stop you from saving in S&S isas alongside and retiring early anyway. It is just access to Pensions that is being restricted to 10 years before SRA

PensionTech

It will almost certainly be April, but don't get too excited - there is likely to be a lead-up "transition period" in which the minimum pension age will rise gradually from 55 to 57 in increments every month or couple of months, rather than all in one hit, just like how the rises in State Pension Age are being introduced. If this is the case then you will be caught by the age 57 requirement.

That's not to say that the Government wouldn't consider just doing it all at once though without a transition period - that's how it was increased from 50 to 55.

rinkydinkpanther

Thank you both.

Being retired for 40 years sounds great to me! Work to me is a necessary evil, and I have been working very hard at stashing away enough money to ensure I have to do it for as short a time as I can get away with.

I wasn't intending to actually take my pension money at 55 - was going to wait until 60 to reduce the actuarial reductions, but assume that if my new minimum pension age is 57, I'll have to wait until 62.

I am investing outside my pensions as well - that was what was going to plug the gap between 55 and 60 and the smaller gap between 60 and 67 until the state pension (although that might also go up to 68 earlier than anticipated?)

Oh well, best keep saving...

PensionTech

was going to wait until 60 to reduce the actuarial reductions, but assume that if my new minimum pension age is 57, I'll have to wait until 62.

Actuarial reductions - so a DB scheme?

Just because minimum pension age is changing doesn't mean your scheme's actuarial factors will change. The scheme's normal retirement age (at least in respect of the benefits you've already accrued - they could always change it for future benefits!) will remain the same, and the actuarial reduction will be based on whether you retire 1 or 2 or 5 years earlier than that normal retirement age. The fact that the statutory minimum pension age is changing won't affect that.

However, it is of course likely that the early retirement factors will have changed by then anyway (unless they're set in your scheme rules, but you say "actuarial" so it sounds like they're not), as life expectancy is a moving target.

Snakey

As I understand it, it's going to follow the rise in State pension age (but ten years lower). So if you are set to get your State pension at e.g. 66 years and 8 months, it'll be 56 years 8 months for your private one.

Celebrate, because one of the options in the consultation document was to increase the age to just five years below the State pension age!

rinkydinkpanther

Oh, yes, I do have a DB pension (USS) and I am lucky enough to be in the final salary bit of it. However, the scheme is up for review (again) so I was assuming that they wouldn't miss the opportunity to bring the minimum age into line. I am expecting that the contributions will have to rise again soon.

I obviously need to go digging into their scheme rules. Thanks again.

Southend1

rinkydinkpanther wrote: »

Oh, yes, I do have a DB pension (USS) and I am lucky enough to be in the final salary bit of it. However, the scheme is up for review (again) so I was assuming that they wouldn't miss the opportunity to bring the minimum age into line. I am expecting that the contributions will have to rise again soon.

I obviously need to go digging into their scheme rules. Thanks again.

My guess is the contributions won't rise, because the employers have stated they won't pay more than 16% which they currently pay, and there is a cost sharing agreement in place between employers and employees. However I think we are going to get royally screwed over with benefit reductions.

PeacefulWaters

You could still retire at 55 or earlier and live off non-pension fund savings, perhaps accrued in a stocks and shares ISA.

hyubh

rinkydinkpanther wrote: »

Oh, yes, I do have a DB pension (USS) and I am lucky enough to be in the final salary bit of it. However, the scheme is up for review (again) so I was assuming that they wouldn't miss the opportunity to bring the minimum age into line.

I think your confusing different things to be honest. Actuarial reductions for taking a DB pension early are relative to the scheme's normal pension age, nothing else, and are imposed purely to neutralise the strain on the pension fund for drawing a pension for longer than the scheme would normally account for.

As such, whether you could legally draw a pension at 50, 55 or 60 makes no difference. Indeed, if you look at the LGPS (a similar-ish scheme to the USS), recent changes actually pushed forward the minimum age for a voluntary early retirement to be in line with the legal minimum (before it was 60).

kidmugsy

2028 is probably four governments away.