Following a recent question posed by Labour MP Stephen Timms to the Chancellor, Conservative MP John Glen reconfirmed the already stated Government stance that the minimum age to access a pension fund will indeed increase from the current age of 55 to age 57 in 2028.
In response, John Glen 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.”
“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.”
The change is founded on the increase in State Pension Age (SPA) to 67 and the desire to ensure pension holders do not exhaust their funds too early into their retirement.
Since the original announcement back in 2014 no provision in legislation has been forthcoming, leading to uncertainty over whether the change was still intended. This latest announcement reconfirms the change will indeed happen, although the exact mechanics of how the change will be implemented are yet to be formalised. However, prior notice ensures those fortunate individuals planning an early retirement in the next decade might have to wait longer to access their pension. In addition, those still intending to retire at 55 may need to accumulate alternative provision in order to facilitate this prior to the increased age of 57.
Furthermore, it is our understanding that this will be linked in the future to 10 years prior to the SPA. As such, with the SPA already intended to increase to 68, clients should expect that the minimum age will increase yet further to 58 also in due course.
For those investors that can afford to retire early, they should perhaps review their strategy if they still hope to finish work at 55, ensuring other personal or corporate investments such as Individual Savings Accounts (ISAs), unit trust / OEICs and investment bonds are in place to plug any gap between their intended retirement age and the minimum age at which they will be able to access their pension funds.
If in light of this you would like to review your retirement planning, then please feel free to contact us.