Time, it has often been said, waits for no-one. However, it did seem that despite the fact that previous Chancellor, George Osborne, when he introduced the pension freedoms which meant private savers could access their savings pots before state pension retirement age, said the minimum age limit for doing so would rise over time it has so far signally failed to do so.
Originally, Mr Osborne intended that the age restriction should be linked to be 10 years behind the state pension age. This is currently 65 but, as everyone in their ‘60s knows, is going to rise to 66 this October and then to 67 between 2026 and 2028. However, despite this, there had been no corresponding provisions in law for an increase in the minimum private pension age to be implemented, leading some to hope that the idea had been kicked into the proverbial overgrown sward.
Not so fast! The Treasury has now confirmed that the minimum private pension age will increase from 55 to 57 in 2028. This will affect savers in their late forties (and those younger) who will now need to wait two years longer before accessing their pension. The government says, probably correctly in my opinion, that this reflects trends in longevity and also the trend to encourage individuals to remain in work, while also helping to ensure pension savings last long enough for later life.
At present, savers can take some or all of the cash held in private pension pots at age 55, including taking 25% of their savings tax free. The changes mean that if you are aged 46 or below you should rethink your plans, especially if you intended to use your pension savings to clear a mortgage or take early retirement.
Julie Downie, Accounts Manager