Since the ground-breaking pension freedom reforms of 2015, savers have got used to the idea that they can begin accessing their pension funds from 55 onwards. Not for much longer, however. The government has now confirmed that this minimum age will rise to 57 from 2028.
The increase will ensure the minimum age at which pensions can be accessible rises in line with the state pension age, which is due to hit 67 in 2028. The idea is to keep the minimum age of ten years below the state pension age. Crucially, however, the government has not yet made a final decision about how the increase will be implemented. Ministers appear to favour giving pension schemes and providers discretion over how they apply the change. That could mean some providers increase the minimum age much sooner than others. Or they might wait until the last minute, with some savers falling just the wrong side of a cliff-edge cut-off point.
For savers who have begun thinking about their retirement in a few years, the debate could have significant implications. Savers who had been expecting to draw pension income at age 55 could find themselves having to wait two years longer than expected. To add insult to injury, they might have peers of the same age at a different pension provider in a different position. Until the government has decided how to proceed, it won’t be easy to make definitive plans. But savers on the verge of making key decisions about how long they continue working and how they will structure their income in later life will need to be ready to act.
Kris Paterson is a writer for www.whatjobs.com the global job search engine