Pensions Freedoms Age Rises To 57:

A brief respite from news of the pandemic saw headlines centre on the minimum age for pension freedoms. The government has now officially confirmed that this will rise to 57 in 2028.  Currently, those paying into a personal pension either directly or through their workplace can access their money at 55. However, as a direct result of increased life expectancy, the government has raised the age. While the change hasn’t yet passed into law, the Treasury Minister has confirmed that it is now in the offing. In parliament, he said: “In 2014 the government announced it would increase the minimum pension age to 57 from 2028, reflecting trends in longevity and encouraging individuals to remain in work, while also helping to ensure pension savings provide for later life.”

Who will be impacted?

In short, the changes will impact those workers currently aged 47 and under.  In recent times, there have been several significant changes in the way we access our pensions. We have already seen the introduction of rules allowing retirees more access to their pensions. These have included:

  • Removing the limit on withdrawals
  • Removing the requirement to buy an annuity to ensure a secure retirement income.
Reception

Opponents to the rise in pensions age have been quick to point out that the changes may restrict workers’ freedom to retire. The changes will inevitably make it more difficult for some to retire as soon as they had hoped. One investment analyst even described the change as a “kick in the teeth at a time when many people are reassessing their work/life balance. 

While the timing for increasing the age of pensions freedoms was always going to be controversial, this has been a particularly terrible year socially, emotionally and economically. It is therefore understandable that the reception has been somewhat mixed.  To counter the negativity, there are those who believe that the changes are a positive step!

Focussing on the fact that the change in the pension freedoms age will give people two years more to pay into their pension funds, will give further opportunity for funds to recover any pandemic-related losses. Those who had been planning to access their pensions at 55 but can no longer do so could look at other options. These could include saving into an ISA to fund the two year period before turning 57. 

 

 

As always, if you are concerned about what the increase in the minimum age for pension freedoms might mean for you, please do get in touch. We’re always happy to help!

Written by Ben Griffiths

Ben is a financial planner from our Whiteley office. While he specialises in pension planning, Ben is also able to generalise into all other areas of financial planning.