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

TVAS

We are living longer cluttering up the place, spending ages at the doctor's with our multiple medical conditions and lingering in hospital. The Welfare State was designed that one worked for 40 years. Retired at 65 and kindly died by 70. This ain't happening any more. We have decided to save people in their 90s with the vaccine we are living longer so it makes sense for the state pension to start at a later date. Trouble is these bloody old people will work for longer not giving the youngsters a chance for career progression. Due to age discrimination you can't sack em and they are rubbish with computers. The people who have moved to Europe for warm weather are patriotic because they are not using the NHS, this route is limited due to Brexit. 

Malthusian

TVAS said:

We are living longer cluttering up the place, spending ages at the doctor's with our multiple medical conditions and lingering in hospital. The Welfare State was designed that one worked for 40 years. Retired at 65 and kindly died by 70.

Not really as when the current welfare state was introduced, people started work at 16 if not earlier (unless they had well-off parents), so a 65 year old non-uni-educated man would have been working for almost 50 years.

Working life has been extended but so has childhood, which now typically lasts until 21 if not longer, and not just for the well-off.

Trouble is these bloody old people will work for longer not giving the youngsters a chance for career progression

This is the "immigrants are taking er jerbs" argument with age replacing skin colour. Old people who work don't take jobs, they create more of them (same as any economic activity). They make more money which they spend which creates more jobs and so on.

The people who have moved to Europe for warm weather are patriotic because they are not using the NHS, this route is limited due to Brexit.

Lots of them move back when they get old enough to use the NHS. Not many people fancy being in and out of hospitals where the doctors don't speak English before moving to a care home where nobody understands you and you have to watch Los Hystericos Telenovelas Spectaculares on TV all day instead of Countdown. Once they get to the age where they might be using the NHS to a significant extent, they tend to move back to be closer to their family.

jamesd

zagfles said:

Seems to be no mention of those who turn 55 in the couple of years before 2028. For instance, someone who turns 55 in Jan 2028. Do they have 3 months in which they can take their pension, up to Apr 2028, but if they don't they have to wait till Jan 2030 when they're 57? What if they've crystallised, can they carry on drawdown?

If the pension was opened on or after 11 Feb 2021 its access age is 57 and they can't touch it when they are only 55. If opened earlier they can because its age is 55. Before or after April 2028 doesn't change the answer, that change happened on 11 Feb 2021.

Seems so:
2.12 ... For members of a registered pension scheme (active, pensioner or deferred members) who do not have such a right, they will retain the current NMPA (age 55) until April 2028, from which point the NMPA will increase to age 57.

To use drawdown you'd have had to take scheme benefits to create the drawdown pot.

jamesd

Retireinten said:

We're planning on retiring at 55 but the timing between when we shift to using ISAs for our retirement income to pensions is key for our planning. The later my pension access date the less I need in pension savings and the more in ISAs. Obviously I'd rather save into pensions for the tax relief. 

Any thoughts on how any changes may be brought in to move from 57 to 58 please? 

If the pension was opened on or after 11 Feb 2021 its access age is 57 and you can't touch it when only 55. If opened earlier you can because its age is 55.

No sign yet.

Sea_Shell said:

As I turn 55 in late 2026, i didn't think I would be impacted by the raise in age. However, would I be forfeiting my ability to access my pension at 55 if I were to open a new pension to transfer in existing ones, between now and then?

Would transferring into an existing one be OK   e.g. Royal London into Aviva?

If the pension was opened on or after 11 Feb 2021 its access age is 57 and you can't touch it when only 55 from April 2028 until you've reached 57. If opened earlier you can because its protected age is 55. We don't yet know whether there will be restrictions on moving money between each age of pension.

hugheskevi said:

If you had put it all into drawdown prior to 6 April 2028, then that would be fine to continue accessing as it would be crystallised. It will be interesting to see how UFPLS works, and whether if you had started accessing a pension via UFPLS before 6 April 2028 you could continue to access uncrystalled parts of the pension through UFPLS after 6 April 2028 but before age 57.

Whether it's in drawdown or had UFPLS taken is irrelevant. If the pension was opened on or after 11 Feb 2021 its access age is 57 and you can't touch it when only 55. If opened earlier you can because its age is 55. Neither drawdown nor UFPLS changes whether it was opened before 11 Feb 2021.

Taking the PCLS to access the pension looks likely to be very popular for those with the wrong ages.

UFPLS leaves an uncrystallised (benefits not taken) part that if not in a scheme with a protected age can be further accessed from age 55 until 5 April 2028 (my bold):

2.12 ... For members of a registered pension scheme (active, pensioner or deferred members) who do not have such a right, they will retain the current NMPA (age 55) until April 2028, from which point the NMPA will increase to age 57.

Seems to favour taking benefits from it all inside that time window, unless the scheme has a protected age.

TVAS

We are living longer that is a fact the number of older people as a percentage of the population is greater now due to medical advances and old people who have it all at the expense of youngsters. I feel sorry for the kids. The Old Codgers got free university education, cheap house buying, DB pension schemes. In contrast to the kids expensive university education, expensive house buying no DB and at worst a crappy Nest pension. The government do not want people to retire early spend all their pensions and come crying to the state cap in hand for benefits.
I don't even know why this is a thread the minimum pension age is increasing to be within 10 years of the state pension age. Whatever party is in power this will happen!

AlwaysLearnin

Whether it's in drawdown or had UFPLS taken is irrelevant. If the pension was opened on or after 11 Feb 2021 its access age is 57 and you can't touch it when only 55. If opened earlier you can because its age is 55. Neither drawdown nor UFPLS changes whether it was opened before 11 Feb 2021.

This doesn't make much sense in reality though. If an individual qualifies for 55, then it shouldn't really matter where the funds are held. This means that impacted people that want to retire at 55 are now potentially forced to stay with a suboptimal platform too (e.g. a platform that is good for accumulation, but not so good for drawdown), which isn't great from the 'consumer choice' view.

If there is no protection planned, I'd imagine it could catch a few people out that unwittingly open and transfer to a new pension after 11/2/21, unaware of this new restriction, which then means that their pension fund availability will be 2 years further away than they could otherwise have accessed it, purely because of the transfer. 

Sea_Shell

AlwaysLearnin said:

Whether it's in drawdown or had UFPLS taken is irrelevant. If the pension was opened on or after 11 Feb 2021 its access age is 57 and you can't touch it when only 55. If opened earlier you can because its age is 55. Neither drawdown nor UFPLS changes whether it was opened before 11 Feb 2021.

This doesn't make much sense in reality though. If an individual qualifies for 55, then it shouldn't really matter where the funds are held. This means that impacted people that want to retire at 55 are now potentially forced to stay with a suboptimal platform too (e.g. a platform that is good for accumulation, but not so good for drawdown), which isn't great from the 'consumer choice' view.

If there is no protection planned, I'd imagine it could catch a few people out that unwittingly open and transfer to a new pension after 11/2/21, unaware of this new restriction, which then means that their pension fund availability will be 2 years further away than they could otherwise have accessed it, purely because of the transfer. 

This is the bit that has me baffled too.    If you're approaching 55 this year, and are with a platform/pension that doesn't offer drawdown, so you need to move provider or product with the same provider, does the 57 rule then automatically come into play??     

So you think you're teeing up imminent drawdown, only to find that you have to wait another 2 years.   That can't be right surely!?

Sea_Shell

It's not quite "set in stone" yet though is it?    The document states...

Page 5
1.13 This consultation seeks views on the implementation of the rise and protections for pension scheme members (chapter 2). It will run until 22 April 2021. Following that date, the government will carefully consider all the responses it has received and will respond in due course. 


Also I can't see where is states that this will apply to all pensions opened from February 2021.    What am I missing.    It would seem even more harsh to retrospectively make new pensions subject to this "consultation" before its actually been passed.

Or is that how these things work, the date of the consultation paper is "top trumps"!?

hugheskevi

jamesd said:

zagfles said:

Seems to be no mention of those who turn 55 in the couple of years before 2028. For instance, someone who turns 55 in Jan 2028. Do they have 3 months in which they can take their pension, up to Apr 2028, but if they don't they have to wait till Jan 2030 when they're 57? What if they've crystallised, can they carry on drawdown?

If the pension was opened on or after 11 Feb 2021 its access age is 57 and they can't touch it when they are only 55. If opened earlier they can because its age is 55. Before or after April 2028 doesn't change the answer, that change happened on 11 Feb 2021.

My reading of the consultation is that for pensions opened after 11 February 2021 the minimum pension age is 55 until 5 April 2028, at which point it increases to age 57 overnight (noting that individual pensions will be free to increase minimum pension age earlier if they wish). Paragraph 2.12 says:

2.12 For members of a registered pension scheme (active, pensioner or deferred members) who do not have such a right, they will retain the current NMPA (age 55) until April 2028, from which point the NMPA will increase to age 57.

In which case, an individual without protection who reached age 55 in January 2028 would be able to access the pension as they have reached the minimum pension age of 55, but if they do not access it before 6th April 2028 then they would have to wait until they reached age 57 in January 2030 to access the pension.

If you're approaching 55 this year, and are with a platform/pension that doesn't offer drawdown, so you need to move provider or product with the same provider, does the 57 rule then automatically come into play??     

That appears to be the case, unless a block transfer can be arranged (which is when a transfer with at least one other individual takes place).

In addition to this, some schemes operate a system of internal transfers on decumulation for their legacy products to provide access to the pension flexibilities. From the member perspective not a great deal changes, but it will be interesting to see how such arrangements are affected by the transfer rules.

Also I can't see where is states that this will apply to all pensions opened from February 2021.    What am I missing.    It would seem even more harsh to retrospectively make new pensions subject to this "consultation" before its actually been passed.

Or is that how these things work, the date of the consultation paper is "top trumps"!?

The relevant text is at para 2.5, (with text in italics added for clarity):

2.5 The government proposes to offer a protection regime for the increase to the NMPA in 2028 for all types of registered pension scheme. This would mean that an individual member of any registered pension scheme (occupational or non-occupational) who has a right under the scheme rules at the date of this consultation (11 February 2021) to take pension benefits at an age below 57 will be protected from the increase in 2028

As the protection will be specific to an individual as a member of a particular scheme (para 2.6), any individual joining a pension after the date of the consultation would not have had the right in the specific scheme as at 11 February 2021 to take that pension before age 57.

The date of consultation is used as this is when it can be argued individuals entering new contracts should reasonably expect that an increased minimum pension age will affect them despite it not being in legislation. It could easily have been argued that date should be 2014, but that would have been more complicated as although the govt. had announced an intention, there was no detail about how things like transfers may or may not affect an individual's position.

noitsnotme

Sea_Shell said:

AlwaysLearnin said:

Whether it's in drawdown or had UFPLS taken is irrelevant. If the pension was opened on or after 11 Feb 2021 its access age is 57 and you can't touch it when only 55. If opened earlier you can because its age is 55. Neither drawdown nor UFPLS changes whether it was opened before 11 Feb 2021.

This doesn't make much sense in reality though. If an individual qualifies for 55, then it shouldn't really matter where the funds are held. This means that impacted people that want to retire at 55 are now potentially forced to stay with a suboptimal platform too (e.g. a platform that is good for accumulation, but not so good for drawdown), which isn't great from the 'consumer choice' view.

If there is no protection planned, I'd imagine it could catch a few people out that unwittingly open and transfer to a new pension after 11/2/21, unaware of this new restriction, which then means that their pension fund availability will be 2 years further away than they could otherwise have accessed it, purely because of the transfer. 

This is the bit that has me baffled too.    If you're approaching 55 this year, and are with a platform/pension that doesn't offer drawdown, so you need to move provider or product with the same provider, does the 57 rule then automatically come into play??     

Approaching 55 this year, as in 2021?  It won’t affect you because the change to 57 doesn’t come in to force until 2028 at which point you will be 62.