Increase to Minimum Pension age from 55 to 57 on 6th April 2028

BillyHorner

I turn 55 in June 2027, so I'm in the group who potentially would still be able to retire (on a reduced pension) at age 55 but, if I haven't done so by April 2028 would have to wait until my 57th birthday in June 2029. I note they've said they will provide further information on how people like me will be affected, but haven't actually done so yet.

I'm in a public sector DB scheme which currently gives me an absolute right to retire immediately on an unreduced pension from age 55 in the event of redundancy. My reading of this consultation response is that this would count as an unqualified right to retire and thus give me a protected pension age of 55 (but only in the event of redundancy, not in any other cicumstance).

However, when they previously moved the minimum pension age from 50 to 55, I know that I would have met all the conditions to have a protected pension age of 50 (again, in the event of redundancy). In that instance, though, the government simply changed the scheme rules to increase the age from 50 to 55, thus nullifying that protection. I'm presuming they could/will do exactly the same this time?

MoneyGeoff

Changes to scheme rules shouldn’t make any difference, it’s the rules on 11 Feb 2021 that matter.

hugheskevi

BillyHorner said:

I'm in a public sector DB scheme which currently gives me an absolute right to retire immediately on an unreduced pension from age 55 in the event of redundancy. My reading of this consultation response is that this would count as an unqualified right to retire and thus give me a protected pension age of 55 (but only in the event of redundancy, not in any other cicumstance).

You either have a protected minimum pension age or you don't, you do not have a protected minimum pension age in certain circumstances.

Are you looking at what the scheme literature says you have, or the actual scheme rules? Scheme literature will have little if any relevance. What do the scheme rules of both the redundancy scheme and pension scheme say? The pension scheme rules are much more significant, as if there is any conflict the terms of the redundancy scheme can be changed well before 2028.

However, when they previously moved the minimum pension age from 50 to 55, I know that I would have met all the conditions to have a protected pension age of 50 (again, in the event of redundancy). In that instance, though, the government simply changed the scheme rules to increase the age from 50 to 55, thus nullifying that protection. I'm presuming they could/will do exactly the same this time?

The government (are you referring to govt as HM Treasury and HMRC who are the owners of the legislation, or to government in its role as the public sector scheme manager? I assume HMT/HMRC) did not change scheme rules. They changed the legislation defining minimum pension age. The scheme rules appear not to have conferred entitlement to a protected minimum pension age of 50, as defined by the legislation.

If you are referring to government as the scheme manager responsible for the redundancy scheme, they could change the terms at any moment, subject to a small amount of consultation.

Paul_Herring

BillyHorner said:

I turn 55 in June 2027, so I'm in the group who potentially would still be able to retire (on a reduced pension) at age 55 but, if I haven't done so by April 2028 would have to wait until my 57th birthday in June 2029. I note they've said they will provide further information on how people like me will be affected, but haven't actually done so yet.

Have you confirmed that if you start withdrawing in June '27, you won't be stopped from withdrawing between April '28 and June '29 anyway? Or are you assuming that 'once you've started, you cannot be stopped?'

I'm in a similar position regarding age, and Vanguard have been unable to give me any indication, thus far, on how they're panning to handle this particular situation. All I have so far is this Reddit post wherein someone asked them about the NMPA, and they answered that they'll shift it in '28.

After seeing a post about the U.K. government consulting on changing the age you can draw personal pensions from 55 to 57; I asked Vanguard what their policy is with their SIPP and received this reply:

“The Vanguard Personal Pension (SIPP) doesn't have a protected pension age. As such, you can access your Vanguard SIPP from the minimum pensionable age, this is currently age 55 as per government regulations, and we will be required to adjust this as the regulations change in the future.”

MaxiRobriguez

Retireinten said:

MaxiRobriguez said:

Anyone who's in an Aegon RetireReady scheme: I asked Aegon outright about retirement ages and they confirmed that access would still be at 55.

Now this would be good news but I'd originally written this scheme off as moving to the new pension age of 57, having skimmed over the terms, so I'm not holding my breath. But I'd rather be pleasantly surprised than disappointed. 

Direct quote from Aegon support:

"I can confirm that the legal minimum age you can withdraw from a pension is 55 and this is not changing"

Of course, they probably should have said "not changing in line with the current government plan to raise access to 57, but this may change in the future"

Alexland

MaxiRobriguez said:

Of course, they probably should have said "not changing in line with the current government plan to raise access to 57, but this may change in the future"

They probably shouldn't have said anything more than the plan access age is 55 and if pushed that the impact of any future legal changes would be reviewed and communicated to scheme members if relevant. The scheme trustees will need to give the matter due consideration after the changes are final. By saying it will not change the support person was likely exceeding their authority.

BillyHorner

hugheskevi said:

You either have a protected minimum pension age or you don't, you do not have a protected minimum pension age in certain circumstances.

Whilst that's true, you can have a protected pension age that doesn't become effective until and unless a particular contingency occurs. In my case, that would have been redundancy. The following quote is taken from the section of the HMRC manual on protected pension age:

Some rules give members an unqualified right to take benefits but only when a certain contingency occurs. It is only when the contingency occurs that the rules of the registered pension scheme give a member the unqualified right to take benefits before age 55 and that they will have a protected pension age. So unless and until the relevant contingency actually occurs in respect of them, the members do not have a protected pension age.

For example, on 10 December 2003 a scheme may give its members an unqualified right to take pension benefits before 55, but only if they are made redundant. If any members are made redundant after 5 April 2010, are aged over 50 but under 55 and exercise their right to take pension benefits, they will have a protected pension age and will not be liable to a tax charge.

However, the government (in its role as scheme manager) simply changed the existing pension scheme rules in April 2010, increasing the minimum age at which the scheme benefits are payable in the event of redundancy to 55 years. Therefore, although I meet the HMRC criteria for a protected pension age of 50 in the event of redundancy, I no longer have the right to an immediate pension at age 50 within my pension scheme.

hugheskevi said:

The government (are you referring to govt as HM Treasury and HMRC who are the owners of the legislation, or to government in its role as the public sector scheme manager? I assume HMT/HMRC) did not change scheme rules. They changed the legislation defining minimum pension age. The scheme rules appear not to have conferred entitlement to a protected minimum pension age of 50, as defined by the legislation.

If you are referring to government as the scheme manager responsible for the redundancy scheme, they could change the terms at any moment, subject to a small amount of consultation.

Apologies, I should have made that clearer. I mean in their role as scheme manager as outlined above.

It's not an employment contract issue as part of a redundancy scheme, which I agree could be changed in the same manner as any other contractual matter. It's a pension scheme benefit for members who have attained a particular age (used to be 50, but now it's 55) which is contained within the scheme rules.

I was summising that, despite the fact that the consultation on the latest proposed rise in minimum pension age suggests that those who currently have a 'right' to retire at 55 will retain it, there's nothing to stop the government (in its role as scheme manager) changing the rules of my pension scheme again and raising it to 57 regardless.

Paul_Herring said:

Have you confirmed that if you start withdrawing in June '27, you won't be stopped from withdrawing between April '28 and June '29 anyway? Or are you assuming that 'once you've started, you cannot be stopped?'

No, I haven't got any such confirmation. Like I said in my previous post, the consultation response says that the government intends to provide further information regarding how people in our age group will be affected, but it hasn't included that in the document itself.

hugheskevi

BillyHorner said:

However, the government (in its role as scheme manager) simply changed the existing pension scheme rules in April 2010, increasing the minimum age at which the scheme benefits are payable in the event of redundancy to 55 years. Therefore, although I meet the HMRC criteria for a protected pension age of 50 in the event of redundancy, I no longer have the right to an immediate pension at age 50 within my pension scheme.

I imagine that provoked an interesting discussion at the time about what constituted an accrued right within the pension scheme.

Still, if it was concluded previously that the rule did not confer an accrued right and therefore could be changed (presumably the reasoning being something along the lines that a right only arises when the circumstance occurs, and not before), I don't see why the same conclusion would not continue to apply - although there will probably be different legal advisers now, and they may reach a different conclusion.

BillyHorner

hugheskevi said:

BillyHorner said:

However, the government (in its role as scheme manager) simply changed the existing pension scheme rules in April 2010, increasing the minimum age at which the scheme benefits are payable in the event of redundancy to 55 years. Therefore, although I meet the HMRC criteria for a protected pension age of 50 in the event of redundancy, I no longer have the right to an immediate pension at age 50 within my pension scheme.

I imagine that provoked an interesting discussion at the time about what constituted an accrued right within the pension scheme.

Still, if it was concluded previously that the rule did not confer an accrued right and therefore could be changed (presumably the reasoning being something along the lines that a right only arises when the circumstance occurs, and not before), I don't see why the same conclusion would not continue to apply - although there will probably be different legal advisers now, and they may reach a different conclusion.

Yeah I don't claim to fully understand it myself to be honest. If you look at the HMRC manual it states the following:

For a member to have a protected pension age under one of the pension vehicles listed above, all the following conditions must be met:

• On 5 April 2006 the member had the right to take a pension and/or lump sum before they were 55,
• That right was unqualified - see What is meant by an unqualified right to take benefits below,
• On 10 December 2003 the scheme rules or deferred annuity contract terms included provision to pay benefits before age 55, and
• The member had either:

1. an unqualified right under that scheme or contract on 10 December 2003, or
2. acquired the right in accordance with that scheme’s provisions as they were on 10 December 2003 upon joining the scheme after that date.

Where these conditions are met, the age at which the member has the right to take a pension on 5 April 2006 will become their protected pension age under the scheme

As I stated previously, an unqualified right can include a right which is contingent upon a certain event, such as redundancy. On that basis, people like me who have been members of the scheme since before 2003 should qualify for a protected pension age of 50 in the event of redundancy.

There's no mention by HMRC of the current wording of the pension scheme rules having to convey the same right (and you would imagine that they would be updated when the law was changed anyway), so I'm presuming that they also assume this would be an accrued right.

However, the things I know for certain are that the pension scheme rules were definitely changed to raise the age for payment of pension on redundancy from 50 to 55. I also know a few people who were in their early 50s who, unfortunately, were made redundant in the past few years and not one of them qualified for immediate payment of their pension.

LEP

Does anyone know when the final proposal is likely to become 'set in stone' legislation?