What happens if you straddle pension age increase?

Fruga

FIREDreamer said:

Obviously you should be able to continue drawing down from a crystallised pot. Crystallising further uncrystallised money may not be so clear cut?

Yes exactly this. Should be ok for drawdown but we need to know one way or the other.

Ad-hoc UFPLUS appeals to me because I have other income sources (primarily savings interest) so would like to decide what to take, tax year by tax year. But as you say if you haven't crystallised then who on earth knows?

From the earlier Fidelity link it looks like if your pension was opened sometime before a date in 2021 you might be ok. I've asked my provider if I have an "unqualified right to take benefits at age 55"....

Pat38493

Have a listen to the latest podcast of meaningful money - near the end there is someone asking this question and the MM experts (who are IFAs) say that this is indeed an issue and that some people could be able to access their pensions at age 55, but then not be able to access them for a period of time, unless the pension rules madate that there is a possibility to retire at 55 with no discretion to the trustees.

I was surprised by that but this is what they are claiming and they said they will be altering their client's withdrawal plan where necessary on the assumption that there will be a "blackout" period in when they can claim pension.

I guess of course it's possible they will pass further legislation to fix this apparent anomoly.

(I was not clear if this affected DB pensions as they seemed to be talking about mainly DC, but I'd need to listen again to be sure).

NoMore

Fruga said:

Grumpy_chap said:

Fruga said:

On 6th April 28 minimum pension age increases to 57. My DOB is Oct 71. If I start accessing a DC pension from Oct 26 (age 55) can I continue? Or on 6th April 28 (age 56) will there be limits on how I can access my pension? What are the guidelines? I'm thinking I would be able to access crystallised funds in a drawdown account, but what if I'm just doing ad-hoc UFPLUS? Could I continue doing that post 6th April when I'll be 56, but the pension age will have moved to 57? I can't find any guidance online on the technicalities.

I am in exactly this position and I asked my IFA.  His response was that he could not see any specific guidance that covers the situation.  His assumption is that if I retire (start drawing pension) in the few months between 55 and April 2028, I can stay retired (continue drawing pension), but if I have not retired (start drawing pension) before April 2028, then I would need to wait until 57.

Hopefully, there will be something that formalises this soon as it could be a big issue to get wrong on an "assumption".  

Of course, there are those that would suggest the changes don't apply to anyone that did not receive a personal letter

Ok well at least that clarifies there's no point paying someone to ask this question, the Fidelity link will hopefully give us the answer in time. 

It will change what I will do. I was planning on UFPLUS to maximise tax efficiency but now I'm thinking of taking the 25% tax free lump sum straight away to cover any potential drought in being able to access the pension. It really is a ludicrous situation.

At your age, if they do restrict access (not convinced this will happen yet), I don't see what the problem is, you can still do Ufpls, it will just be in or after October 2028 for the 2028/2029 tax year. Don't see why you conclude that you go from Ufpls for tax efficiency to crystallise the lot due to a six month delay. If you were older with a possible two year gap, then maybe do it.

I'm in the April 72 bracket so I possibly lose a full year of access. I am off the opinion they can't possibly allow people to access some of their pension at 55, then prevent access for possibly up to 2 years because of this jump in access age. How can that make sense. 

Fruga

NoMore said:

Fruga said:

Grumpy_chap said:

Fruga said:

On 6th April 28 minimum pension age increases to 57. My DOB is Oct 71. If I start accessing a DC pension from Oct 26 (age 55) can I continue? Or on 6th April 28 (age 56) will there be limits on how I can access my pension? What are the guidelines? I'm thinking I would be able to access crystallised funds in a drawdown account, but what if I'm just doing ad-hoc UFPLUS? Could I continue doing that post 6th April when I'll be 56, but the pension age will have moved to 57? I can't find any guidance online on the technicalities.

I am in exactly this position and I asked my IFA.  His response was that he could not see any specific guidance that covers the situation.  His assumption is that if I retire (start drawing pension) in the few months between 55 and April 2028, I can stay retired (continue drawing pension), but if I have not retired (start drawing pension) before April 2028, then I would need to wait until 57.

Hopefully, there will be something that formalises this soon as it could be a big issue to get wrong on an "assumption".  

Of course, there are those that would suggest the changes don't apply to anyone that did not receive a personal letter

Ok well at least that clarifies there's no point paying someone to ask this question, the Fidelity link will hopefully give us the answer in time. 

It will change what I will do. I was planning on UFPLUS to maximise tax efficiency but now I'm thinking of taking the 25% tax free lump sum straight away to cover any potential drought in being able to access the pension. It really is a ludicrous situation.

At your age, if they do restrict access (not convinced this will happen yet), I don't see what the problem is, you can still do Ufpls, it will just be in or after October 2028 for the 2028/2029 tax year. Don't see why you conclude that you go from Ufpls for tax efficiency to crystallise the lot due to a six month delay. If you were older with a possible two year gap, then maybe do it.

I'm in the April 72 bracket so I possibly lose a full year of access. I am off the opinion they can't possibly allow people to access some of their pension at 55, then prevent access for possibly up to 2 years because of this jump in access age. How can that make sense. 

That's a fair point, so instead of monthly UFPLUS just do it annually.

Pat38493

Fruga said:

NoMore said:

Fruga said:

Grumpy_chap said:

Fruga said:

On 6th April 28 minimum pension age increases to 57. My DOB is Oct 71. If I start accessing a DC pension from Oct 26 (age 55) can I continue? Or on 6th April 28 (age 56) will there be limits on how I can access my pension? What are the guidelines? I'm thinking I would be able to access crystallised funds in a drawdown account, but what if I'm just doing ad-hoc UFPLUS? Could I continue doing that post 6th April when I'll be 56, but the pension age will have moved to 57? I can't find any guidance online on the technicalities.

I am in exactly this position and I asked my IFA.  His response was that he could not see any specific guidance that covers the situation.  His assumption is that if I retire (start drawing pension) in the few months between 55 and April 2028, I can stay retired (continue drawing pension), but if I have not retired (start drawing pension) before April 2028, then I would need to wait until 57.

Hopefully, there will be something that formalises this soon as it could be a big issue to get wrong on an "assumption".  

Of course, there are those that would suggest the changes don't apply to anyone that did not receive a personal letter

Ok well at least that clarifies there's no point paying someone to ask this question, the Fidelity link will hopefully give us the answer in time. 

It will change what I will do. I was planning on UFPLUS to maximise tax efficiency but now I'm thinking of taking the 25% tax free lump sum straight away to cover any potential drought in being able to access the pension. It really is a ludicrous situation.

At your age, if they do restrict access (not convinced this will happen yet), I don't see what the problem is, you can still do Ufpls, it will just be in or after October 2028 for the 2028/2029 tax year. Don't see why you conclude that you go from Ufpls for tax efficiency to crystallise the lot due to a six month delay. If you were older with a possible two year gap, then maybe do it.

I'm in the April 72 bracket so I possibly lose a full year of access. I am off the opinion they can't possibly allow people to access some of their pension at 55, then prevent access for possibly up to 2 years because of this jump in access age. How can that make sense. 

That's a fair point, so instead of monthly UFPLUS just do it annually.

This was the position of the MM guys as well - they were saying it's nothing to panic about you just need to withdraw enough before that blackout period to cover the gap.

Pat38493

NoMore said:

Fruga said:

Grumpy_chap said:

Fruga said:

On 6th April 28 minimum pension age increases to 57. My DOB is Oct 71. If I start accessing a DC pension from Oct 26 (age 55) can I continue? Or on 6th April 28 (age 56) will there be limits on how I can access my pension? What are the guidelines? I'm thinking I would be able to access crystallised funds in a drawdown account, but what if I'm just doing ad-hoc UFPLUS? Could I continue doing that post 6th April when I'll be 56, but the pension age will have moved to 57? I can't find any guidance online on the technicalities.

I am in exactly this position and I asked my IFA.  His response was that he could not see any specific guidance that covers the situation.  His assumption is that if I retire (start drawing pension) in the few months between 55 and April 2028, I can stay retired (continue drawing pension), but if I have not retired (start drawing pension) before April 2028, then I would need to wait until 57.

Hopefully, there will be something that formalises this soon as it could be a big issue to get wrong on an "assumption".  

Of course, there are those that would suggest the changes don't apply to anyone that did not receive a personal letter

Ok well at least that clarifies there's no point paying someone to ask this question, the Fidelity link will hopefully give us the answer in time. 

It will change what I will do. I was planning on UFPLUS to maximise tax efficiency but now I'm thinking of taking the 25% tax free lump sum straight away to cover any potential drought in being able to access the pension. It really is a ludicrous situation.

At your age, if they do restrict access (not convinced this will happen yet), I don't see what the problem is, you can still do Ufpls, it will just be in or after October 2028 for the 2028/2029 tax year. Don't see why you conclude that you go from Ufpls for tax efficiency to crystallise the lot due to a six month delay. If you were older with a possible two year gap, then maybe do it.

I'm in the April 72 bracket so I possibly lose a full year of access. I am off the opinion they can't possibly allow people to access some of their pension at 55, then prevent access for possibly up to 2 years because of this jump in access age. How can that make sense. 

I guess that if this really is an issue, it is is no major issue as long as you are aware of it and therefore able to plan around it.  As we see with other pension matters the big problems come where people are unaware of it until it's too late.

Fruga

Pat38493 said:

Have a listen to the latest podcast of meaningful money - near the end there is someone asking this question and the MM experts (who are IFAs) say that this is indeed an issue and that some people could be able to access their pensions at age 55, but then not be able to access them for a period of time, unless the pension rules madate that there is a possibility to retire at 55 with no discretion to the trustees.

I was surprised by that but this is what they are claiming and they said they will be altering their client's withdrawal plan where necessary on the assumption that there will be a "blackout" period in when they can claim pension.

I guess of course it's possible they will pass further legislation to fix this apparent anomoly.

(I was not clear if this affected DB pensions as they seemed to be talking about mainly DC, but I'd need to listen again to be sure).

Thanks had a listen, for the benefit of others the question gets asked at 32:25 through the podcast (26th March episode)

huw01

I will turn 55 in January 2028 and was planning on taking my LGPS then along with my automatic lump sum (pre 2008 membership). I also have a defined contribution workplace pension which I was thinking of not touching until later on in my 50's or early 60's.

It never occured to me that as long as I was 55 by 6 April 2028 that it would be a problem for me. I just presumed you had to be 55 by that date or then unluckily you would have to wait another 2 years. 

What would happen if your birthday was the day before the deadline ? You won't have started drawing down you pension but you would have been eligible to as you were 55 before 6 April 2028.

Fruga

huw01 said:

I will turn 55 in January 2028 and was planning on taking my LGPS then along with my automatic lump sum (pre 2008 membership). I also have a defined contribution workplace pension which I was thinking of not touching until later on in my 50's or early 60's.

It never occured to me that as long as I was 55 by 6 April 2028 that it would be a problem for me. I just presumed you had to be 55 by that date or then unluckily you would have to wait another 2 years. 

What would happen if your birthday was the day before the deadline ? You won't have started drawing down you pension but you would have been eligible to as you were 55 before 6 April 2028.

I think DB schemes are fine. I'm doing the opposite, I'm drawing on a DC scheme at 55. At 60 my DB scheme kicks in unreduced with a healthy lump sum which I built up through AVCs. I'm amazed that this issue even exists, as you say if you're 55 before the deadline that should be that. Unfortunately that's not what the rules say as they are drafted currently, fingers crossed it gets clarified but as the podcast points out the main point is to be aware of the issue and plan around it. I'm grateful to have had this discussion on this forum to clarify some points in advance. 

dchi98

I turn 55 on the 3rd April 2028, a few days before the retirement date change. I have an old bank DB scheme that I am hoping to access at this time. Really not sure if this will be possible due to the tight timescales.