Private pension increase from 55 in 2028?

veryintrigued

Thought this (Sep.2020) article below might be of assistance.

https://www.ft.com/content/26b91aac-8c73-44cc-b8d7-1aae371ab951

Especially to those on the threshold (expected to be April 6th 1973).

Millions of people in the UK younger than their late forties will have to wait an additional two years to dip into their retirement funds after the government confirmed plans to raise the minimum pension access age to 57 in 2028.

Since pension rules were relaxed in 2015, millions of individuals have taken advantage of new freedoms over how they can take cash from their private pension pots from the age of 55. 

However, on Thursday the government confirmed it would legislate to enact proposals, first mooted six years ago, to increase the minimum access age from 55 to 57 in 2028.

“In 2014 the government announced it would increase the minimum pension age to 57 from 2028, reflecting trends in longevity and encouraging individuals to remain in work, while also helping to ensure pension savings provide for later life,” said John Glen, economic secretary to the Treasury, in response to a written question from Stephen Timms, a Labour MP.

“That announcement set out the timetable for this change well in advance to enable people to make financial plans and will be legislated for in due course.”

In 2014, the government said the change would apply to all pension schemes aside from those in the public sector that link their normal pension age to the state pension age, such as those for firefighters, the police and the armed forces.

Steven Cameron, pensions director with Aegon, a pensions provider, said the announcement clarified lingering uncertainty. “The government did indicate back in 2014 its intention to do this, but didn’t include provisions in legislation, leading to uncertainty over whether the change was still planned,” he said.

“This latest announcement confirms the change will happen . . . and will be particularly impactful on those who were due to reach their 55th birthday just after the cut-off.”

Experts said the move would probably affect those born after April 6, 1973, who are aged 47 and younger today. They will have to wait an extra two years to take either a lump sum or income from their pension. 

According to the Office for National Statistics, around 860,000 people were 46 years old in the UK in 2019, and are due to turn 55 in 2028.

David Hearne, a chartered financial planner with Satis Wealth Management, said the move would probably result in individuals having to revisit financial plans.

“Those with a significant part of their assets in pensions are often waiting for 55 to achieve other plans such as repaying a mortgage, so increasing to 57 may mean two more years of interest payments,” said Mr Hearne.

“It may also delay others helping their children with university or first house purchases.”

Savers can access private pensions before the minimum access age but those who do risk a steep 55 per cent tax penalty on what they draw.

hugheskevi

In 2014, the government said the change would apply to all pension schemes aside from those in the public sector that link their normal pension age to the state pension age, such as those for firefighters, the police and the armed forces.

I wonder where the author got this misunderstanding from.

MoneyGeoff

hugheskevi said:

In 2014, the government said the change would apply to all pension schemes aside from those in the public sector that link their normal pension age to the state pension age, such as those for firefighters, the police and the armed forces.

I wonder where the author got this misunderstanding from.

That was my understanding too. What part of it is untrue?

hugheskevi

MoneyGeoff said:

hugheskevi said:

In 2014, the government said the change would apply to all pension schemes aside from those in the public sector that link their normal pension age to the state pension age, such as those for firefighters, the police and the armed forces.

I wonder where the author got this misunderstanding from.

That was my understanding too. What part of it is untrue?

True for the post 2015 NPA 60 schemes, not for public sector schemes that link their normal pension age to the state pension age, eg Civil Service, NHS, LGPS, etc. Consultation document response said:

Therefore, the government does not intend to apply the minimum pension age increase to those public service schemes for Firefighters, Police and the Armed Forces. The government is clear that the change should apply to public service pension schemes, where pension ages are linked to State Pension age, and to those in the private sector.

So text saying "In 2014, the government said the change would apply to all pension schemes aside from those in the public sector that link their normal pension age to the state pension age, such as those for firefighters, the police and the armed forces." is not accurate.

(note: original text edited for clarity, which was quoted in posts below as I edited)

MoneyGeoff

hugheskevi said:

MoneyGeoff said:

hugheskevi said:

In 2014, the government said the change would apply to all pension schemes aside from those in the public sector that link their normal pension age to the state pension age, such as those for firefighters, the police and the armed forces.

I wonder where the author got this misunderstanding from.

That was my understanding too. What part of it is untrue?

Can you reference any source that suggests the minimum pension age for public service pension schemes will remain at age 55? I am not aware of any.

The government said "The government will increase the minimum age at which people can access their private pension under the new tax rules from 55 to 57 in 2028; the change will apply to all pension schemes aside from those in the public sector that will not link their normal pension age to State Pension age from 2015, namely for the Firefighters, Police and Armed Forces."
They aren't saying all public service pension schemes; they are saying specifically those that are not linked to state pension age.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/332714/pensions_response_online.pdf

Paul_Herring

hugheskevi said:

MoneyGeoff said:

hugheskevi said:

In 2014, the government said the change would apply to all pension schemes aside from those in the public sector that link their normal pension age to the state pension age, such as those for firefighters, the police and the armed forces.

I wonder where the author got this misunderstanding from.

That was my understanding too. What part of it is untrue?

Can you reference any source that suggests the minimum pension age for public service pension schemes with Normal Pension age will remain at age 55? I am not aware of any.

This would lead to the perverse situation where a Civil Servant with Normal Pension age of 68 could access their pension at age 55, but an in-service policeman with a Normal Pension age 60 couldn't access their pension until age 57.

From your original quote:

change would apply to all pension schemes aside from those in the public sector that link their normal pension age to the state pension age, such as those for firefighters, the police and the armed forces.

I see no mention, or implication, about civil servants there, so not sure where you're getting that from.

And police can still get theirs (albeit at a lower rate) from 55.

MoneyGeoff

I don't see any implication about civil servants either. I think the wording is fine because they specifically called out firefighters, the police and the armed forces. I don't like this sentence though: "Savers can access private pensions before the minimum access age but those who do risk a steep 55 per cent tax penalty on what they draw." It's misleading because HMRC see that as an unauthorised payment and charge 55%-70% of the pot:

https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/pension-liberation-plans

It's a bit like saying it's perfectly fine to drive at 100mph (subject to losing your driving license) or you are allowed to murder someone (subject to live in prison).

hugheskevi

MoneyGeoff said:

I don't see any implication about civil servants either. I think the wording is fine because they specifically called out firefighters, the police and the armed forces. 

The wording directly contradicts the HMT Con Doc response, which says "The government is clear that the change should apply to public service pension schemes, where pension ages are linked to State Pension age" whereas the article says "the government said the change would apply to all pension schemes aside from those in the public sector that link their normal pension age to the state pension age."

The point about Civil Servants was that they are in a public service pension scheme with pension age linked to State Pension age. Therefore the wording of the article suggests they would have a minimum pension age of 55, which is not the case.

bownyboy

“In 2014 the government announced it would increase the minimum pension age to 57 from 2028, reflecting trends in longevity and encouraging individuals to remain in work, while also helping to ensure pension savings provide for later life,” said John Glen, economic secretary to the Treasury, in response to a written question from Stephen Timms, a Labour MP.

Except the trends in longevity have been decreasing since 2011 
https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/bulletins/nationallifetablesunitedkingdom/2017to2019

MoneyGeoff

hugheskevi said:

MoneyGeoff said:

I don't see any implication about civil servants either. I think the wording is fine because they specifically called out firefighters, the police and the armed forces. 

The wording directly contradicts the HMT Con Doc response, which says "The government is clear that the change should apply to public service pension schemes, where pension ages are linked to State Pension age" whereas the article says "the government said the change would apply to all pension schemes aside from those in the public sector that link their normal pension age to the state pension age."

The point about Civil Servants was that they are in a public service pension scheme with pension age linked to State Pension age. Therefore the wording of the article suggests they would have a minimum pension age of 55, which is not the case.

Ah yes, they should have said NOT linked.