The government has confirmed the point at which people will be able to access their personal pensions is to increase from 55 to 57 in 2028.
Economic secretary to the Treasury John Glen has confirmed: "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."
In 2014 it was also confirmed that the exception to this change would be for the Firefighters, Police and Armed Forces pension schemes as these schemes’ normal pension ages reflect the unique nature of these occupations.
The government has also previously announced that the minimum pension age will remain ten years below State Pension age thereafter and that it plans to increase state pension age to 68 between 2037 and 2039. We should therefore assume that the minimum retirement age will be increased to age 58 in line with this.
Review your ‘pension mortgage’ if you have one: some individuals may have taken out a pension mortgage and viewed their tax-free cash entitlement as the method for paying off their mortgage. If this is the case, then those individuals might need to review their strategy in view of this proposed change.
Pension contributions remain an extremely tax efficient form of saving for retirement and where possible, individuals should ensure they maximise the amount they save into pensions. However, pensions legislation and tax reliefs can be complex and careful consideration should be given prior to taking any action.
Given the current climate, there has also been considerable speculation on the generous tax reliefs currently applying to pension contributions and it would not come as any surprise if Rishi Sunak were to announce some further changes in the upcoming autumn statement.
Our financial planning team can help you devise your retirement planning strategy and advise on pensions accordingly. They can also help you consider other tax efficient means of saving for retirement.
If you have any questions about the issues raised in this article, get in touch with your financial adviser or contact one of our financial planning consultants.
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