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

Thrugelmir

green_man said:

I’m struggling somewhat to see what the rationale is for this.

Blocks early retirement in the public sector.  Cost saving exercise. Given the increased life expectancy of many. 

Also with the working population forecast to decline there'll be fewer people to fund those drawing state benefits. 

Cus

Does a regular sipp (before February) have a protected right to access at 55?
Does a regular workplace DC pension have the same?
Surely if true this will rule out a huge percentage of people from having to wait till 57?

And why would a child sipp have this protection if regular ones didn't?

Notnewnotold

Hmm, I have a transfer in flight. I've now got 4 separate pensions (one DB and 3 DC), after some consolidation. 

None are exactly trivial, and I've got no idea whether I will have protected rights to draw at 55 on any of them. Given I'm 2 days the wrong side of the line, I'm quite keen to find out... 

MDMD

Cus said:

Does a regular sipp (before February) have a protected right to access at 55?
Does a regular workplace DC pension have the same?
Surely if true this will rule out a huge percentage of people from having to wait till 57?

Not necessarily- the ConDoc says

 By “right”, throughout this consultation document, we mean an unqualified right under which individuals do not need the consent of any other person (such as an employer or trustee) before they can take their benefits at a particular age.

 My SIPP states 

In order to be able to take pension drawdown through the Fidelity SIPP where benefits haven’t been taken before, you must be able to fulfil the following criteria:
• You must be aged 55 or over
• Your pension account value must be at least £50,000

I’m not 100% sure that this is “unqualified” as there is this statement later on

12.9 Changing or replacing these Terms
We may change these Terms:
• if the Revenue withdraws the registration of the Scheme;
• to meet any change in Legal Requirements;

So to me that would not be “unqualified” as the provider has the right to change terms whether I like it or not.

But after this tax year, once I reach my target investment level, I am reconsidering my strategy. My issue with ISAs is that the tax benefits only exist in the UK whereas pensions are generally safe from taxation (should I choose to live overseas at any point in the future).

green_man

Thrugelmir said:

green_man said:

I’m struggling somewhat to see what the rationale is for this.

Blocks early retirement in the public sector.  Cost saving exercise. Given the increased life expectancy of many. 

Also with the working population forecast to decline there'll be fewer people to fund those drawing state benefits. 

Rules could be made per public sector scheme if required, any early retirement requests should be subject to proper actuarial analysis such that no additional costs would be incurred.  Whatever rules are in place for public sector (or in fact and DB scheme), that doesn’t mean they must also apply to SIPPs.

if we had full employment then I could see a need to incentivise working till older, but is that really a likely hood in the next 10 years?

Thrugelmir

green_man said:

Thrugelmir said:

green_man said:

I’m struggling somewhat to see what the rationale is for this.

Blocks early retirement in the public sector.  Cost saving exercise. Given the increased life expectancy of many. 

Also with the working population forecast to decline there'll be fewer people to fund those drawing state benefits. 

Rules could be made per public sector scheme if required, any early retirement requests should be subject to proper actuarial analysis such that no additional costs would be incurred.  Whatever rules are in place for public sector (or in fact and DB scheme), that doesn’t mean they must also apply to SIPPs.

if we had full employment then I could see a need to incentivise working till older, but is that really a likely hood in the next 10 years?

The Treasury will be forecasting it's finances many years ahead. The damage caused by Covid is far greater than that of the GFC. Which in itself hadn't been fully addressed.  No reason for SIPPs to be excluded. 

Alexland

MDMD said:

I’m not 100% sure that this is “unqualified”

I read that document too as we each have a Fidelity SIPP. It gets a bit circular if the scheme terms reserve the right to be amended if required by law but then the legislation will say that it is not required to be amended as the age of access is unconditional on permission from another person. Except maybe the terms will need to be amended to explain the age of access difference depending on when the account was opened.

In the spirit of the intent of the proposed protection it seems clear that people signing up for a SIPP were told they could access from age 55 even if many of us suspected it would be delayed by a previously announced intention to increase. It was getting to the point where I was wondering how providers could get away without mentioning the strong possibility of an increase when signing up new customers. So many people will not have known that so might have reasonably aligned their interest only mortgage to conclude shortly after their 55th birthday, etc and there is recognition they now need treating fairly which is great if it happens.

Thrugelmir

Alexland said:

MDMD said:

I’m not 100% sure that this is “unqualified”

So many people will not have known that so might have reasonably aligned their interest only mortgage to conclude shortly after their 55th birthday, 

Somewhat unlikely.  Clearing the interest only mortgage with the tax free lump sum would require a considerable pot to have been built.  Far more than the average borrower probably even accumulates in their entire working lifetime. 

Alexland

Thrugelmir said:

Clearing the interest only mortgage with the tax free lump sum would require a considerable pot to have been built.  Far more than the average borrower probably even accumulates in their entire working lifetime.

Depends how long they had the property (as the price paid may have diminished in significance with inflation) or if like us it was a repayment mortgage before being switched to interest only so the balance isn't much.

LHW99

I would hope if this goes ahead that the ability to add to a SIPP / DC and get tax relief would also increase from 75 to 78 ie 10 years after SPA.