What if they changed the rules on age

Johnny_P

From my earlier post I am formulating my plan B which has raised a thought.

If I was to take my DB pension from 55 (later this year) as a 'high start, then reducing', which would keep me under tax limits, and then move my other DC pots into a SIPP, but leave it alone to grow for a few years, then it brings me to a question of what happens if they change the rules?

For example, what if I get to 57 happily taking my DB pot and they change the rules to say that you cannot take a personal pension until 60?

Of course my DB is fine, but what of my SIPP?

Appreciating that the answer will be 'it depends on what they say', but I am wondering what happened to people who were 52 when they changed the age from 50 to 55?
Did they have the opportunity to take their pension before the age changed to 55, or did it not apply to anyone already over 50, or did they get caught up and have to wait 3 more years to access their pensions?

Thanks

Malthusian

Johnny_P wrote: »

Appreciating that the answer will be 'it depends on what they say', but I am wondering what happened to people who were 52 when they changed the age from 50 to 55?

They could move their pension into income drawdown before 6 April 2010 and take maximum tax free cash. They then retained the ability to draw income from the fund, even while they were under 55. Within the capped drawdown limits that applied in the pre-pension-freedoms era.

I think they potentially had to wait to 55 if they wanted to buy an annuity or transfer to another drawdown provider, but I can't remember. It hardly mattered anyway.

The likelihood is that the same will apply when the new rules come into force in 2028 - if you don't want to be locked out when the minimum age goes up, you can go into income drawdown beforehand.

I can't see the Government withdrawing the ability to draw from pensions that have already been put into income drawdown. It would be inconsistent and inequitable because as you touch on with reference to DB pensions, those who bought an annuity certainly aren't going to have their annuity payments stopped until they reach 57, so why should those who opted for income drawdown be denied income?

There is also talk of a taper applying but it really isn't necessary - there was a 5-year cliff edge in 2010 and almost no-one protested because the option to take income drawdown, and the fact that anyone planning to retire before 55 had plenty of time to build a retirement fund outside their pension, meant there was almost no protest.

This is a duplicate post because someone seems to be playing silly muggers with merging threads.

Malthusian

Someone seems to have merged my reply to Johnny P's new thread into this one without merging the post I was replying to.

The question Johnny P was asking in the new thread is a completely separate question about future legislation and I really don't see the need for a thread merger.

Paul_Herring

For example, what if I get to 57 [in two years] happily taking my DB pot and they change the rules to say that you cannot take a personal pension until 60?

That is not going to happen, and any other changes of that ilk are unlikely to ever affect you due to your age.

The most recent proposal, back in 2014, is to increase it to 57 in 2028, the latest thread about it is here: https://forums.moneysavingexpert.com/discussion/5902379/private-pension-increase-from-55-in-2028

And no, we don't know even now, how it will be introduced (i.e. cliff-edge or gradual.)

Johnny_P

Thanks both. I was hoping that I would beat further changes and it seems most likely given upcoming proposals.