Increase to Minimum Pension age from 55 to 57

[cloud_dog]

There is a interesting discussion going on on the MSE Pension forum regarding the recently published HM Treasury document on increasing the minimum pension age from 55 to 57.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/960034/NMPA_consultation_2021.02.10.pdf

Thanks to hugheskevi for the post.
https://forums.moneysavingexpert.com/discussion/6240982/increase-to-minimum-pension-age-from-55-to-57-february-2021-hmt-consultation/p1

The interesting point about the published consultation paper is that it seems to indicate that any pension scheme in place on or before 11 February 2021 will retain the right for the individual to draw from the account at/after age 55 as opposed to having to wait until age 57.

Obviously this is a consultation paper and nothing is set in stone until, well, it is set in stone but, for anyone who may be considering drawing pensions around the 55 to 57 age and just prior to the April 2028 time period you may want to ensure that you do not undertake any pension transfers (unless it is in to a pre-existing scheme opened before 12 February 2021).

[markiii]

fingers crossed

[LeadFarmer]

It's to align with state retirement age of 67, and to maintain the 10 year gap between both state and private retirement ages.

We were told about this at work last year, with the information I was given I am safe from the changes and can retire at age 55. There was a deadline date set, which I can't recall, but may be the date you gave, whereby if you were 55 before that date you would be safe.

[anonymous-user]

LeadFarmer said:

It's to align with state retirement age of 67, and to maintain the 10 year gap between both state and private retirement ages.

That's all very well, but with with Phil the Greek being moved from his private hospital to Barts you wonder whether,
(a) the Royal Family's private health insurance has run out,
(b) Harry the Tw@t legged it with the silver from Granny's corner cabinet at Windsor, or
(b) the state Pension age will be increased to 75 next year.

[TwigtheWonderkid]

My understanding was that the increase in minimum age from 55 to 57 applies to those born in 1973 or later. So if born in 1972, you can take your pension at 55 in 2027, but if you're born in '73 &turn 55 in 2028, you've got to wait until you're 57 in 2030.

[p1doc]

TwigtheWonderkid said:

My understanding was that the increase in minimum age from 55 to 57 applies to those born in 1973 or later. So if born in 1972, you can take your pension at 55 in 2027, but if you're born in '73 &turn 55 in 2028, you've got to wait until you're 57 in 2030.

that is what I thought as I turn 55 in 2028 so have to wait 2 further years to retire but will have a look in mse forum

[cloud_dog]

TwigtheWonderkid said:

My understanding was that the increase in minimum age from 55 to 57 applies to those born in 1973 or later. So if born in 1972, you can take your pension at 55 in 2027, but if you're born in '73 &turn 55 in 2028, you've got to wait until you're 57 in 2030.

So, this is where the HM Treasury consultation paper gives an indication that that cliff edge switch will not apply to those affected after 2028 IF you have a pension scheme opened before 11 February 2021. If this is the case someone who is 55 in 2030 and had a pension account open before 11 February 2021 will still be able to draw funds at age 55 (in 2030, after the increase date).

Whilst none of this is set in law yet, It might therefore be useful for people who may be affected and perhaps were going to open or transfer (consolidate) pensions in to a new pension to ensure they retain access to a pension opened prior to 11 February 2021, so as to retain the earlier age access right. It would also appear to suggest (or rather the reading of the details appears to suggest) that transfers from an account opened after 11 February 2021 in to an account opened before 11 February 2021 would all be classified as retaining the early access age right (age 55).

[98elise]

LeadFarmer said:

It's to align with state retirement age of 67, and to maintain the 10 year gap between both state and private retirement ages.

We were told about this at work last year, with the information I was given I am safe from the changes and can retire at age 55. There was a deadline date set, which I can't recall, but may be the date you gave, whereby if you were 55 before that date you would be safe.

I don't see why there should be a link between the private and state pensions. If you can retire at 55 on your private pension then that's not affected by the state pension.

Fortunately I'm already 55, but it seems unfair to push the pension age up for a private scheme.

[Mr Pointy]

I wonder what percentage of the normal population (ie not powerfully built PH Director types) this will actually affect? It must be a relatively small number of people who can afford to retire at 55 when we're told to look forward to most people having to work much later than they expected.

[Mr Pointy]

cloud_dog said:

So, this is where the HM Treasury consultation paper gives an indication that that cliff edge switch will not apply to those affected after 2028 IF you have a pension scheme opened before 11 February 2021. If this is the case someone who is 55 in 2030 and had a pension account open before 11 February 2021 will still be able to draw funds at age 55 (in 2030, after the increase date).

Whilst none of this is set in law yet, It might therefore be useful for people who may be affected and perhaps were going to open or transfer (consolidate) pensions in to a new pension to ensure they retain access to a pension opened prior to 11 February 2021, so as to retain the earlier age access right. It would also appear to suggest (or rather the reading of the details appears to suggest) that transfers from an account opened after 11 February 2021 in to an account opened before 11 February 2021 would all be classified as retaining the early access age right (age 55).

What about if you want to transfer the other way though: from an old into a new? Will the incoming transfer to the new scheme retain the retire-at-55 rights of the old? If not this could be a potential brake on pension mobility, especially as the age rises from 57 upwards.

[otolith]

98elise said:

I don't see why there should be a link between the private and state pensions. If you can retire at 55 on your private pension then that's not affected by the state pension.

Fortunately I'm already 55, but it seems unfair to push the pension age up for a private scheme.

Presumably this relates to the tax advantages attached to pensions?

[TwigtheWonderkid]

98elise said:

LeadFarmer said:

It's to align with state retirement age of 67, and to maintain the 10 year gap between both state and private retirement ages.

We were told about this at work last year, with the information I was given I am safe from the changes and can retire at age 55. There was a deadline date set, which I can't recall, but may be the date you gave, whereby if you were 55 before that date you would be safe.

I don't see why there should be a link between the private and state pensions. If you can retire at 55 on your private pension then that's not affected by the state pension.

I think they are trying to protect people from themselves. Currently you can go at 55 and have to fund a 12 year gap between now and your SP kicking in at 67. If you can do it, that's fine, but maybe many will think they can but will find out in the coming years that they can't.

I'm going at the end of April, aged 58.5, so I'm funding an 8.5 year gap. I've costed it, and am confident I'll be ok, but I could be wrong if things change. The bigger the gap, the harder it is to cost accurately.

[Jawls]

98elise said:

LeadFarmer said:

It's to align with state retirement age of 67, and to maintain the 10 year gap between both state and private retirement ages.

We were told about this at work last year, with the information I was given I am safe from the changes and can retire at age 55. There was a deadline date set, which I can't recall, but may be the date you gave, whereby if you were 55 before that date you would be safe.

I don't see why there should be a link between the private and state pensions. If you can retire at 55 on your private pension then that's not affected by the state pension.

Fortunately I'm already 55, but it seems unfair to push the pension age up for a private scheme.

My reading of this is that there are several motivations:

1. Government doesn’t want people to retire mega early (lost economic output and tax revenue)

2. Government doesn’t want people to have mega pension pots due to lost tax revenue through the generous reliefs. So you have multiple policies all in service of this (reductions of LTA etc) that all make pensions less attractive for very high earners.

3. Government trying to protect people from themselves (paternalism)

As for the substance of this consultation, be very interesting to see what gets made law eventually.

[cloud_dog]

Mr Pointy said:

What about if you want to transfer the other way though: from an old into a new? Will the incoming transfer to the new scheme retain the retire-at-55 rights of the old? If not this could be a potential brake on pension mobility, especially as the age rises from 57 upwards.

Currently I don't believe the consultation supports that, e.g. your right to access at age 55 after 2028 will be lost. Obviously, the devil is in the detail and things can change. For example, are they going to raise the pension crystallisation age from 75 to 77, in line with the revision to the SP age?

[simonrockman]

Retirement age should be linked to life expectancy. When people lived three score and ten, a retirement age of 65 was reasonable. Now that life expectancy is 84, and more work is knowledge-based, the retirement age should reflect that. If we don't start work until our 20s, retire at 65 and live to 100 the amount of working time we have, when we are paying tax makes the maths impossible.

This book: https://www.amazon.co.uk/100-Year-Life-Living-Work...

Looks at a model where you re-enter education several times in your life and have repeated careers.

Simon

[Trevor555]

People took out a private pension with the goalposts set at age 55

And this can simply be changed against their will?

[Mr Pointy]

simonrockman said:

Retirement age should be linked to life expectancy. When people lived three score and ten, a retirement age of 65 was reasonable. Now that life expectancy is 84, and more work is knowledge-based, the retirement age should reflect that. If we don't start work until our 20s, retire at 65 and live to 100 the amount of working time we have, when we are paying tax makes the maths impossible.

This book: https://www.amazon.co.uk/100-Year-Life-Living-Work...

Looks at a model where you re-enter education several times in your life and have repeated careers.

That doesn't work though because while we now on average live longer there isn't the same increase in the time we stay healthy for. We've become very good at keeping from people from dying but that just means a huge increase in an elderly population with degenerative diseases like dementia & Alzheimers & they are never going to be able to be productive.

Life expectancy is only part of the story; healthy life expectancy is the key parameter.

[cloud_dog]

Trevor555 said:

People took out a private pension with the goalposts set at age 55

And this can simply be changed against their will?

BUT, that is not what the consultation paper is saying, in fact it is saying the opposite.

[superlightr]

Trevor555 said:

People took out a private pension with the goalposts set at age 55

And this can simply be changed against their will?

I had a private pension set at 50 and its already been forced on me to only take at 55.

Taking a private pension earlier then the state pension does not necessary mean not working at 55 - it was as age I set when I was in my 20's simply that. like an endowment.

Will still have to work after 55 even with the private pension - Porsches are not cheap.

[98elise]

Mr Pointy said:

simonrockman said:

Retirement age should be linked to life expectancy. When people lived three score and ten, a retirement age of 65 was reasonable. Now that life expectancy is 84, and more work is knowledge-based, the retirement age should reflect that. If we don't start work until our 20s, retire at 65 and live to 100 the amount of working time we have, when we are paying tax makes the maths impossible.

This book: https://www.amazon.co.uk/100-Year-Life-Living-Work...

Looks at a model where you re-enter education several times in your life and have repeated careers.

That doesn't work though because while we now on average live longer there isn't the same increase in the time we stay healthy for. We've become very good at keeping from people from dying but that just means a huge increase in an elderly population with degenerative diseases like dementia & Alzheimers & they are never going to be able to be productive.

Life expectancy is only part of the story; healthy life expectancy is the key parameter.

Agreed. How does it work for people with physical aspects to their jobs.