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

Alexland

LEP said:

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

Well they have published the draft legislation but even if approved there's nothing stopping the government publishing further changes and associated legislation in future.

LEP

Alexland said:

LEP said:

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

Well they have published the draft legislation but even if approved there's nothing stopping the government publishing further changes and associated legislation in future.

Yes of course it could change but I doubt they would change it again to impact my situation.

I'm 47 and want to retire at 55 and assumed I'd not be able to draw on my pensions until I reached 57.....on this basispart of my planning is to have 2 years 'cash' to fund my lifestyle from 55-57... Both my pensions currently say I the right to draw them from age 55 so if this is protected it will change my planning significantly.

hugheskevi

LEP said:

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

The Explanatory Notes suggest the changes will be made through the annual Finance Act.

The 2021 Finance Act was passed in March 2021, so on that basis, March 2022 would be a reasonable guess for the draft legislation to be passed.

MDMD

Fidelity have now published their view on their own rules

https://www.fidelity.co.uk/markets-insights/personal-finance/saving-for-retirement/how-could-pension-freedom-age-rise-impact-you/

Does caveat they are waiting for final legislation but is positive.

Alexland

MDMD said:

Fidelity have now published their view on their own rules

Woo - I'd give you 10x thanks for that link if the forum software would let me!

This is by far my favourite forum thread of all time - well worth the MSE membership fee...

"On the 11 February 2021 the Fidelity SIPP scheme rules stated that scheme members can access their benefits from age 55. Therefore, based on the information provided to date it is our current understanding that the Fidelity SIPP would offer a right to access pension benefits at 55."

Yes that's extremely, provisionally, positive for our family and shows we have not been excessively optimistic when discussing in this thread that Fidelity looks like a good scheme for access at 55. It's also good news they are forward thinking on this issue and will probably be one of the first to publish a definitive statement once the legislation is final.

It's not just having access to 2 years living expenses 55-57 but it affects the whole cashflow planning of how we make ISA and pension contributions over our remaining working life. It means that some of the life event costs for our children can now probably be paid from my TFLS rather than ISAs meaning that we don't need to make such high S&S ISA contributions (already have enough in there to bridge from 50-55) and should probably be putting more into my younger wife's pensions while still supported by earnings to see if we can try and get her somewhere towards LTA too. She is already salary sacrificing down to the personal allowance (above min wage as she is part time) and we need to decide if we start putting 100% of her income into pensions (using the SIPP for the untaxed element) before the end of this tax year. We already did it a few tax years ago just for fun but seems strange to go to 100% pension contributions in her 30s.

The other advantage of earlier access is we are less likely to have breached our LTAs if it is crystalised earlier and I will have access to my TFLS to recycle some into my wife's SIPP and LISA (just before she turns 50) when we are not working in the tax years when I am 55 and 56. Also less years we will be carrying the modest interest only mortgage before TFLS access. I need to start a list of all the things I need to do with my TFLS as I am starting to forget them....

MDMD

Unfortunately I still am slightly nervous about transferring anything else in as it does say on the fidelity website here: https://www.fidelity.co.uk/transfer/pension/ 

Additionally, when a customer transfers their pension to or from another scheme, individual transfers may not be protected from the increase in the normal minimum pension age.

How on earth will people be able to identify how much of the money relates to one particular transfer, particularly if people have switched funds in the intervening period…..

(Credit to someone on this Reddit thread) 

https://www.reddit.com/r/UKPersonalFinance/comments/pawaow/fidelity_confirms_they_believe_their_sipp_will_be/

cloud_dog

Alexland said:

Yes that's extremely, provisionally, positive for our family and shows we have not been excessively optimistic when discussing in this thread that Fidelity looks like a good scheme for access at 55.

I'm sure my child will be very grateful to me in nearly 40 years time when they are (provisionally) able to access their pension at age 55.   

Alexland

cloud_dog said:

I'm sure my child will be very grateful to me in nearly 40 years time when they are (provisionally) able to access their pension at age 55.   

Yes our kids will be very excited to see if their £125 has grown to be enough over the next 50ish years to retire early. Fidelity raised no issues when I asked for their £20+£5 per month regular plan to be cancelled after a few months. We will probably make some more substantial topups into their SIPPs if/when we get some inheritance.

hugheskevi

cloud_dog said:

I'm sure my child will be very grateful to me in nearly 40 years time when they are (provisionally) able to access their pension at age 55.   

This is a very important point. Although there are never any guarantees, once protection is given it is very unusual for it to be removed.

However, should the minimum pension age increase again in the future, protection may not be given at that time, or may not be provided in the same way.

So securing a protected minimum pension age of 55 before April 2023 by opening a protected pension may prove to be far more beneficial than just protecting from a 2 year increase. This is particularly true for young children - children can have a pension in the same way as adults, and pensions can be opened with minimal amounts. Young adults too, who are much less likely to engage with pension detail, may in future be thankful for carpet-bagging a protected minimum pension age.

Alexland

hugheskevi said:

This is particularly true for young children - children can have a pension in the same way as adults, and pensions can be opened with minimal amounts.

I guess the downside is to maintain that protected pension age the kids will have to put up with whatever the provider chooses to charge until they retire at 55. By then it will probably be a ReAssure style legacy scheme so it's probably worth keeping evidence of age 55 access in printed form with their account paperwork.

I am still keeping our tiny £125 L&G SIPPs which also should have age 55 access just incase of unexpected issues with Fidelity.