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

cloud_dog

We shall see what the future holds.

Alexland

I was just updating my spreadsheets and realised yet another benefit of protected access at age 55 is an extra 2 years to use the personal allowance so for someone around LTA that's around 2.5% more that can be drawn tax free!

hugheskevi

Alexland said:

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.

I suspect there would be ways around this due to transfers out having ring-fenced protection in the receiving scheme.

For example, if funds transferred into a protected scheme from an unprotected pension gain protected status, then transferring an unprotected pension into the protected scheme and then out again would get the funds into a competitive pension with ring-fenced protected status. 

Or, maximum contributions at the end of a tax year and start of a tax year followed by a transfer out would get a decent pot with ring-fenced protection to cover the period between 55 and standard normal minimum pension age at a competitive provider. 

I think the reform is giving options of generous protection to the most engaged individuals who are willing to jump through some hoops, relying on most people being completely disengaged with pensions and inertia to ensure protection is not very widespread.

Alexland

Yesterday I had my 1 hour conversation with my newly re-assigned Fidelity wealth relationship manager. The first few minutes were a bit scripted but once we got talking she really knew her stuff and was happy to talk broadly about investments elsewhere with no pressure to transfer them or buy their advice. She asked some really well targeted questions and seemed very interested in my strategy to try and retire at 50 using a combination of ISAs, LISAs and pensions including some recycling. I've got to say it's an amazing service for the £45 capped per year we pay them on each SIPP especially with the free junior accounts. Anyway she again confirmed what we have been talking about on how the Fidelity minimum access age should stay at 55 and they expect to send out communications confirming protected access age promptly after the legislation is approved. She was a bit shocked my wife might still be mid 40s at retirement and it made me think I might go for 1/40th drawdown rather than 1/35th to get closer to natural yield as any money we now contribute while still in work is to derisk our plans by building excess account valuations.

cloud_dog

Any update on the provision of a LISA????

Alexland

cloud_dog said:

Any update on the provision of a LISA????

No she just agreed that Fidelity don't offer them. She did ask about how my relationship with AJ Bell was going but I just told her we were happy with them too and the LISAs were also getting similar capped fees.

Cus

I went on their website and they have a message about the potential new rules.

Do you expect that if someone opens a SIPP now they will stand by the 55 age? What about if you transfer money into that SIPP now?

Alexland

Cus said:

Do you expect that if someone opens a SIPP now they will stand by the 55 age? What about if you transfer money into that SIPP now?

Yes with the right schemes from the draft legislation although some including the insurance industry and AJ Bell (hmm.. maybe I am not happy with them...) are lobbying to make it simpler and just increase almost everyone to 57 - eek!
https://www.thisismoney.co.uk/money/markets/article-9989301/Trade-body-slams-Governments-complicated-rules-private-pension-age-rise.html
It's really annoying this not being certain as it affects the decisions on which tax wrappers we should be making contributions into right now. Getting access at 57 is so not optimal for us.

jsinc

Yep wouldn't assume a done deal yet.

https://www.abi.org.uk/news/news-articles/2021/09/stop-more-confusion-for-pension-savers-abi-calls-for-simplicity-when-the-government-increases-pension-access-age/

granta

jsinc said:

Yep wouldn't assume a done deal yet.

https://www.abi.org.uk/news/news-articles/2021/09/stop-more-confusion-for-pension-savers-abi-calls-for-simplicity-when-the-government-increases-pension-access-age/

Interesting article. Key message seems to hang on "things being confusing for everyone" but is there anything else behind the ABI's stance?

I've been informed by Utmost (formerly Equitable Life) that my small pot with them has access at 55 written in 'unless government position changes'. I don't know what means in practice and whether the above will impact it?