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

Croeso69

Silvertabby said:

shilts said:

Out of interest , how much notice do the government normally give for a change to the age you can start to claim state pension ? I’m 53 this year and intend to retire at 60 and just wondering whether I’d still be likely to be able to claim state pension at 67 , thanks .

I read somewhere that the intention is to give at least 10 years notice of any future changes to SPA - but don't know if that was ever rubber stamped.

Latest info is here i believe ...

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/310231/spa-timetable.pdf

Alexland

Hmm I had already accepted that the government would push my NMPA age out to 58 or maybe 60 in a couple of decades time and am doing some pointless financial engineering to get around it using an interest only mortgage (to be repaid later from the TFLS) to enable higher S&S ISA contributions. It does iritate me the government needlessly frustrate those who have accumulated large pension pots and just want to retire early.
But this consultation seems to accept that if you are a member of a scheme which has an unqualified right to access at age 55 in the rules then the increase wouldn't apply? If that became established as a principle then it might be possible that even someone young could skip later increases and get access at 55? Maybe we should request an official baselined copy of the scheme rules from our pension providers to see exactly what they say at this time?

Notnewnotold

michaels said:

Notnewnotold said:

michaels said:

Annoying if you turn 55 on the 6 April 2028....

Or the 7th April, in my case 

I would still rather be 3 years younger and be impacted by this change....

I had an interesting thought, I wonder how much of a blip covid is making to life expectancy (and thus the actuarial costs of pensions for the govt and providers), increasing life expectancy is the rationale behind increases to pension ages.

Back of the envelope, if we got to 140k extra deaths that would be about one sixth of normal annual deaths.  If each covid victim lost on average 6 years of life (probably an overestimate) then life expectancy would be down by 1 year which is pretty large in the scheme of things (although it should then be recovered over the next decade or so if covid ends)

Well, hell, if I could be 15 years younger with the same capital behind me I'd take it, even if it pushed back my minimum pension age... time is priceless (especially if you could throw a bit of hindsight in there too!)

Alexland

I am surprised this thread hasn't been more popular.

The possibility of having protection to access to our existing pensions at age 55 has had me buzzing all morning as I had assumed around 58/60 so this could reduce my remaining working life by around 25%.

I emailed a couple of my pension providers asking for their scheme rules document as their websites are mostly summaries and FAQs but they all still say access from age 55 so I am optimistic but it really seems to depend on the formal drafting in the scheme rules.

This might cause an immediate problem for any company professionally involved in transferring pensions of the many people who under this consultation would have new protected rights? Should people be warned, should transfers not happen until it's clearer, etc? Is this protection going to distort the pensions market so badly it won't happen?

hugheskevi

I am surprised this thread hasn't been more popular.

For many it won't be relevant, and the change will only affect people at least 7 years in the future, so I guess it doesn't matter to a lot of people.

The possibility of having protection to access to our existing pensions at age 55 has had me buzzing all morning as I had assumed around 58/60 so this could reduce my remaining working life by around 25%.

I was very happy to see that too - I was assuming age 58 would be my minimum pension age. Age 55 is good for me in two particular ways -

(1) Due to the great returns of the last decade, I already have more DC than I need, even without future returns, so this surplus funding now appears to cover age 55-58 without the need for more saving and

(2) I plan to leave work at age 44, and the period to when DC pensions become available is the trickiest (and hence most risky) to fund, but once DC is available then there is a big lump of capital available (25% tax free lump sum plus drawing down to avoid higher rate tax gives lots of available funding) - that tricky period now appears to have been reduced from 14 years to 11, which is a significant reduction.

This might cause an immediate problem for any company professionally involved in transferring pensions of the many people who under this consultation would have new protected rights? Should people be warned, should transfers not happen until it's clearer, etc? Is this protection going to distort the pensions market so badly it won't happen?

The more I have thought about this, the more I think it is all rather over-complicated.

As long as an individual has a DC pension they started before February 2021, even after they change employer and start a new pension scheme (with a higher minimum pension age) or even start a new personal pension, they would just be able to transfer the new pension into the old pension at some point and be able to take it all from age 55. I would have thought the protection makes more sense to be linked to the individual than the pension arrangement.

Hopefully that doesn't result in consideration of not permitting transfers of unprotected pension into protected pension, or even worse some sort of splitting of pension within an individual arrangement into protected and unprotected tranches.

PParka

I was also expecting my NMPA to be at least 57.  But as a turn 55 in early 2028, it looks like I’m going to be OK. 

I’ve already put 2 years expenses into a S&S ISA to bridge the gap, so I'm now looking at two options:
   Retire at 53
   or
   up my current pension contributions even more and deplete the ISA money. 

green_man

Ok course you can retire whenever you want or can afford.  I retired at 47 but only this month have I reached 55 and started drawdown of my pension. Given enough warning you can structure your savings accordingly.     

I’m struggling somewhat to see what the rationale is for this. Is it to ensure people don’t run out of money? If so you could maybe have some rule along the lines of only withdrawing 2.5% of your pot a year before 57 (or whatever age).  

It just seems like Spite to me.  I can’t afford to retire so why should I let you retire!!

hugheskevi

green_man said:

I’m struggling somewhat to see what the rationale is for this. Is it to ensure people don’t run out of money? If so you could maybe have some rule along the lines of only withdrawing 2.5% of your pot a year before 57 (or whatever age).  

It just seems like Spite to me.  I can’t afford to retire so why should I let you retire!!

I always find it interesting just how many limits the Treasury think they need, e.g.:

• Lifetime Allowance - limit amount of pension that can be accrued without further tax penalties
• Annual Allowance - limit amount of pension accrual in a single-year
• Money Purchase Annual Allowance - limit amount of DC pension that can benefit from tax relief after pension has been accessed
• Earnings eligible for tax relief - limit amount of tax relief Exchequer will provide on contributions
  
• Age 75 limits - limit tax relief offered to oldest people
  
• Minimum pension age - limit age from which pensions and the tax relief provided can be paid from
  
• Mandatory advice for transfer of DB pension to flexible pension - protect individuals from themselves
• Recycling of pension lump sum rules
  
• Income tax structure - automatic incentive not to withdraw pension all at the same time
  

Whereas for ISAs, there is a simple annual contribution limit (and a few more limits for different types of ISA), and do whatever you like (including Lamborghinis) without question, however big your pot grows ISAs well in excess of the Lifetime Allowance exist, with far fewer restrictions than pensions face.

I think it is just a case of not really having any particular plan, eg, like the 2006 regime which centred on Lifetime Allowance as the limiting factor in the system, and instead just tweaking all the various levers every now and again depending on what whomever the decision maker in charge at the time sees as the policy issue of the day.

Silvertabby

green_man said:

Ok course you can retire whenever you want or can afford.  I retired at 47 but only this month have I reached 55 and started drawdown of my pension. Given enough warning you can structure your savings accordingly.     

I’m struggling somewhat to see what the rationale is for this. Is it to ensure people don’t run out of money? If so you could maybe have some rule along the lines of only withdrawing 2.5% of your pot a year before 57 (or whatever age).  

It just seems like Spite to me.  I can’t afford to retire so why should I let you retire!!

It's probably an attempt to limit the number of people who spend up before their State pensions kick in, and so have to claim means tested benefits (if eligible).

Alexland

hugheskevi said:

Hopefully that doesn't result in consideration of not permitting transfers of unprotected pension into protected pension, or even worse some sort of splitting of pension within an individual arrangement into protected and unprotected tranches.

This consultation has spooked me enough to not do any more pension transfers until we clearly understand the final rules that might apply to age 55 access protection and which (if any) of our 3 pensions each get confirmed to have this protection. I slightly regret not opening a child SIPP for our kids (even though there are better uses for the money) so they could have this protection.

Like you our pensions are already enough that no further contributions are required but we need 2% growth above inflation to both repay the mortgage and provide for early retirement (including an extra £9k pa each until SP starts) from mid 50s. We will continue our high contribution rate for a few more tax years to derisk that outcome. While we have six digits in ISAs/LISAs it's mostly earmarked to help the kids (not that we ever received that much help) so are only now really starting to invest for our pre-pension period. So yes with a fair wind it might be possible for us to retire in our early 50s. Don't want to get my hopes up too far as this protection might not happen.