Pension Age Increase

Pension Age Increase

The government have confirmed that the age at which you are allowed to take benefits from your pensions will increase to age 57 from 55.  This will be implemented from 6th April 2028. This means that for some, we will have to wait an extra 2 years to access our pension.

The pension age increase is intended to retain the 10 year age gap between the ages at which you can access your State and Private pensions.

Why the change?

Economic Secretary to the Treasury, John Glen, said. “In 2014 the government announced it would increase the minimum pension age to 57 from 2028. This reflects trends in longevity and encouraging individuals to remain in work. Also helping to ensure pension savings provide for later life.

“That announcement set out the timetable for this change well in advance to enable people to make financial plans and will be legislated for in due course.”

How will the pension age increase affect you?

There will be no phasing of the the introduction of the age change,. This means that:
  • People born before 6th April 1971 can continue to be able to access their pensions from age 55
  • Those born after 5th April 1973 will have to wait to age 57
  • Those born between these two dates will have the option to access their pension from their 55th birthday to 6th April 2028. If they do not, they will have to wait until they are 57.
Police, firefighters and the armed forces will not be impacted by the change.

Protection scheme

This would allow some schemes to retain the right of its members pre February 2021 to access their benefits at age 55.  This does however, depends upon how the scheme rules are written. If they are written as per current legislation, the pension age would increase to age 57 in line with the legislation changes.  If the scheme rules say the pension can be accessed at age 55, this will continue to be the case.
The rules could cause issues for those wishing to consolidate their pensions. This is because, by transferring you would lose the option to take benefits at age 55. This can be circumnavigated by transferring with a “buddy” or as part of a block transfer. This is where 2 or more people transfer from one scheme to another at the same time. By doing so, the right to access the pension at age 55 would remain. By transferring individually, it would not.

Pension Age Increase – a summary

Data from the Office of National Statistics (ONS) found that between April 2016 and March 2018, 16% of those between 55-59 had a private pension in payment. The changes in rules mean that 509,426 people (16% of 3,183,915 people) could potentially be impacted by this change.

The pension rules are complex and if you are thinking of transferring you pension or would like to know how this could impact your financial plans, speak to an Independent Financial Adviser.

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